Js«sss«>^\'' 


THE 


Premises  of  Political  Economy; 


BEING    A 


RE-EXAMINATION  OF  CERTAIN  FUNDAMENTAL  PRINCIPLES 


OP 


ECOlSrOMIO  SCIEIvTCE. 


BY 

SIMON  N.  PATTEN,  Ph.D.  (Halle). 


PHII^ADEIiPHIA: 

J.   B.   LIPPINCOTT  COMPANY. 

1885.     ' 


Copyright,  1885,  by  Simon  N.  Patten. 


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_,  TO    HIS 

ljJ  teacher  and  friend, 

DR.   JOHANNES    CONEAD, 

PROFESSOa   IN   THE   UNIVERSITY   OF   UALLE, 

TO   WHOSE    KIND   ENCOURAGEMENT    AND   INSPIRING    EXAMPLE    HIS   MANY 
-  STUDENTS    OWE    SO    MUCH, 

g  THIS    LITTLE    AVORK 

•^  IS     GRATEFULLY     DEDICATED     BY 

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\  THE   AUTHOR. 


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OOE^TEE^TS. 


PAOK 

Introduction 7 

ODAPTEK 

I.— Kent 19 

11. — The  Social  Causes  producing  a  High  Price 

OF  Food      .        .        . 46 

III. — The  Law  op  Population 72 

IV. — The  Kelation  of  Kent  to  Wages   ...  95 

V. — Free  Competition 121 

VI. — The  Law  of  Diminishing  Keturns          .        .  152 

VII.— Free-Trade 184 

VIII. — The  Means  of  maintaining  a  High  Stand- 
ard OF  Life 211 


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IE"TEODUOTIOK 


The  Science  of  Economics  has  had  a  historical  de- 
velopment. At  first  some  of  its  important  truths  were 
dimly  perceived,  then  a  theory  was  formulated,  new 
doctrines  from  time  to  time  were  added,  the  old  doc- 
trines gradually  became  better  known  and  understood, 
and  errors  have  been  gradually  detected  and  discarded. 
As  a  result  of  this  development  the  doctrines  of  the 
science  have  been  formulated  in  a  very  objectionable 
manner,  and  economic  truths  have  lacked  symmetry, 
the  newer  doctrines  not  having  been  applied  to  all  parts 
of  the  science,  while  old  errors,  though  driven  from 
their  strongholds,  still  lurk  in  many  unsuspected 
corners.  These  considerations  make  a  return  to  the 
discussion  of  first  princij)les  necessary,  and  this  I  take 
up  the  more  readily  because  of  a  conviction  that  they 
are  not  correctly  apprehended  in  the  current  economic 
literature. 

Since  the  time  of  Ricardo  the  discussion  of  first 
principles  has  been  very  one-sided,  the  ultimate  prem- 
ises used  by  him  having  been  accepted  by  most  subse- 


8  INTRODUCTION. 

quent  writers.  It  is  true  that  many  economists  have 
rejected  the  premises  of  Ricardo,  but  having  done  this 
on  other  than  purely  economic  grounds,  they  have  had 
little  or  no  effect  on  the  development  of  the  science. 
It  is  my  purpose  in  the  following  discussion  to  contest 
from  strictly  economic  grounds  the  validity  of  several 
fundamental  propositions  laid  down  by  Eicardo  and 
other  writers  of  the  same  school. 

A  word  of  explanation  is  necessary  to  prevent  an 
erroneous  conception  of  my  purpose.  I  do  not  call  in 
question  those  ultimate  facts  concerning  the  physical 
conditions  of  external  nature  of  which  Ricardo  makes 
so  much  use,  and  on  which  deductive  Economics  is  at 
present  based,  but  shall  endeavor,  by  the  use  of  other 
facts  equally  ultimate  in  their  nature,  to  prove  that 
many  of  the  leading  doctrines  now  accepted  by  most 
economists  must  be  discarded,  to  give  place  to  other 
doctrines  more  in  harmony  with  the  real  phenomena. 

An  illustration  from  natural  science  will  make  clear 
what  I  have  in  view.  The  motion  of  the  earth  around 
the  sun  is  the  result  of  two  separate  forces,  either  of 
which  operating  alone  would  produce  a  far  different 
result.  If  gravitation  were  the  only  operating  force, 
the  earth  would  fall  into  the  sun,  but  if  the  first  law 
of  motion  alone  prevailed,  the  earth  would  fly  away 
into  empty  space.  If  only  one  of  these  forces,  as 
gravitation,  were  known,  men  would  predict  the  de- 


INTRODUCTION.  9 

struction  of  the  earth  by  fire  as  a  fact  of  the  near 
future,  and  those  who  denied  this,  as  inconsistent  with 
the  kindly  purposes  of  Providence  or  what  not,  would 
be  regarded  as  unscientific,  and  derided  for  bringing  in 
other  than  physical  causes  to  account  for  the  phenomena 
of  nature. 

The  justice  of  these  charges  would  entirely  depend 
upon  the  method  pursued  by  the  objectors.  If  they 
denied  the  law  of  gravitation,  the  charge  would  be 
just;  but  if  they  sought  to  demonstrate  the  existence 
of  natural  laws  that  counteracted  gravitation,  and  thus 
to  prove  false  the  conclusions  based  on  the  assumption 
that  gravitation  were  the  only  operating  force,  then  they 
would  be  pursuing  a  proper  course  of  investigation, 
and  could  not  justly  be  stigmatized  as  unscientific. 

The  present  Science  of  Economics  is  as  imperfect  as 
Astronomy  would  be  if  one  of  the  laws  of  motion 
were  unknown.  In  each  department  of  Economics  all 
the  deductions  are  based  on  some  one  ultimate  fact,  and 
the  conclusions  arrived  at  are  true  only  on  condition 
that  no  other  ultimate  facts  exist  which  influence  the 
phenomena  under  investigation.  The  law  of  rent  is 
usually  discussed  as  though  differences  of  soil  were  the 
sole  cause  of  rent,  and  the  law  of  population  only  con- 
siders the  difference  between  the  possible  rates  of  in- 
crease of  population  and  food,  while  free  trade  and  the 
effects  of  free  competition  are  discussed  from  an  equally 


10  INTRODUCTION. 

narrow  stand-point.  It  is  plain  that  such  discussions 
are  of  a  very  limited  value,  if  many  ultimate  facts,  or 
even  any,  are  overlooked,  and  it  is  my  purpose  to  point 
out  these  neglected  facts,  and  to  place  them  in  proper 
relation  to  those  facts  at  present  so  much  used  in  de- 
ductive Economics. 

The  increase  in  the  price  of  food  accompanying  the 
advance  of  civilization,  is  the  main  point  which  eco- 
nomic theories  have  to  explain.  Is  the  increased  price 
the  result  of  a  single  cause,  or  does  it  arise  from  a 
combination  of  various  causes,  and  are  these  causes 
of  a  physical  or  of  a  social  nature  ?  The  well-known 
answer  of  Ricardo  is  that  there  is  a  single  physical 
cause, — the  various  degrees  of  fertility  which  different 
lands  possess.  The  best  lands  are  limited  in  quantity, 
and  as  the  demand  for  food  increases  less  fertile  lands, 
having  a  higher  cost  of  cultivation,  must  be  brought 
into  use,  and  hence  the  price  of  food  must  rise  when 
more  food  is  required  for  an  increasing  population. 
Ricardo  gives  this  answer  in  his  explanation  of  rent, 
and  Malthus  adopts  the  same  view  in  discussing  the 
law  of  population,  by  assuming  that  the  means  of  sub- 
sistence are  exhausted,  or  nearly  so,  because  the  price 
of  food  is  high.  It  is  no  wonder  that  so  simple  and 
apparently  self-evident  an  explanation  has  found  ready 
acceptance,  and  one  theory  of  rent  having  been  pre- 
sented, no  one  took  the  trouble  to  investigate  whether 


INTRODUCTION.  H 

some  other  theory  could  account  for  all  the  facts  needing 
explanation. 

In  the  following  chapters  I  shall  endeavor  to  present 
a  consistent  theory,  showing  that  the  main  causes  of 
rent,  and  of  the  increased  price  of  agricultural  produce, 
are  not  of  a  physical,  but  of  a  social  nature.  The 
prevalence  of  ignorance,  and  a  lack  of  appreciation  of 
inexclusive  pleasures,  cause  a  demand  for  commodities 
of  which  nature  can  supply  but  small  quantities,  waste 
a  large  part  of  what  is  produced,  and  at  the  same  time 
prevent  the  distribution  of  population  and  the  increase 
of  capital.  The  ignorant  and  inefficient  classes  dis- 
place the  skilled  and  intelligent,  because  their  wants 
are  so  limited  that  they  are  able  to  give  a  greater  sur- 
plus as  rent  than  the  higher  classes  can  do,  and  what- 
ever class  can  give  the  greater  surplus  gets  posses- 
sion of  the  field  of  employment,  and  thus  the  survival 
of  other  classes  is  prevented.  By  these  social  causes  a 
high  price  of  food  can  be  brought  about,  but  this  high 
price  affords  no  indication  of  the  exhaustion  of  the 
food-supply,  unless  the  field  of  employment  is  much 
larger  to  the  ignorant  than  to  the  intelligent  classes. 
From  the  nature  of  the  field  of  employment,  then, 
must  it  be  determined  whether  rent  has  physical  or 
social  causes.  If  the  field  of  employment  enlarges  as 
the  people  become  skilled  and  accumulate  wealth,  then 
what  may  be  called  the  social  theory  of  rent  is  correct ; 


12  INTRODUCTION. 

on  the  other  hand,  if  the  ignorant  possess  much  the 
larger  field  of  employment,  then  the  physical  theory 
of  rent  based  on  the  natural  obstacles  to  the  increase 
of  food  must  be  accepted.  The  only  condition  on 
which  it  could  be  true  that  the  field  of  employment 
would  be  larger  to  the  ignorant  than  to  the  intelligent 
classes,  is  that  the  greater  portion  of  the  land  of  the 
earth  has  so  low  a  degree  of  fertility  that  the  higher 
classes  cannot  be  employed  on  it.  If  the  greater  part 
of  the  land  has,  or  can  be  made  to  have,  a  high  degree 
of  fertility,  there  can  be  no  doubt  that  the  intelli- 
gent classes,  when  not  prevented  by  social  causes,  can 
obtain  a  much  larger  gross  produce  from  the  more  fer- 
tile land,  and,  while  supporting  a  much  larger  popula- 
tion, can  also  increase  the  average  return  for  labor 
above  what  the  inefficient  classes  could  get  from  all  the 
land.  Whether  the  physical  or  social  theory  of  rent  is 
correct  must  be  determined  by  the  ratio  of  the  superior 
to  the  inferior  lands,  and  if  I  show  that  most  of  the 
land  either  has,  or  is  capable  of  having  a  high  degree 
of  fertility,  I  shall  disprove  the  physical  theory  of 
rent,  which  explains  the  increased  price  of  agricultural 
prodlice  from  physical  causes. 

The  difference  between  the  view  of  nature  which 
Ricardo  tacitly  adopts  and  that  which  I  advocate  may 
be  well  illustrated  in  the  following  manner.  Suppose 
the  bed  of  a  lake,  like  that  of  Lake  Michigan,  to  be 


IN  TROD  UCTION.  1 3 

gradually  filled  with  water,  how  could  its  depth  afc 
any  given  point  be  determined?  Kicardo,  if  he 
reasoned  as  he  does  in  solving  the  problem  of  rent, 
'  would  answer  that  the  depth  at  any  point  could  be  dis- 
covered by  determining  how  much  the  water  had  risen 
since  the  point  in  question  was  submerged. 

Now  this  method  of  procedure  overlooks  the  effect 
of  the  Avater  on  the  lake's  bed.  The  depth  at  various 
places  has  been  changed  by  the  currents  in  the  water 
and  by  the  action  of  the  waves.  The  outline  of  the 
bed  of  Lake  Michigan  is  very  different  from  what  it 
was  when  first  filled  with  water,  and  no  knowledge  of 
its  old  outline  will  enable  us  to  determine  deductively 
the  outline  of  the  present  bed. 

Most  of  the  conclusions  drawn  from  the  law  of  rent 
are  defective,  because  it  is  assumed,  first,  that  land  is 
thrown  out  of  cultivation,  when  less  land  is  needed,  in 
an  order  exactly  the  reverse  of  that  in  which  it  is 
brought  into  cultivation, — the  last  land  brought  into 
that  cultivation  being  the  first  to  be  thrown  out ;  and, 
secondly,  the  rise  of  rent  since  land  of  a  given  quality  has 
been  brought  into  cultivation  is  a  correct  index  of  the 
rent  that  could  be  paid  for  the  land.  The  extent  and 
character  of  the  field  of  employment  sets  a  limit  to  the 
support  of  population,  and  fixes  the  average  return  for 
labor;  and  if  this  field  of  employment,  besides  being 
determined  by  external  nature,  is  also  influenced  by 


14  INTRODUCTION. 

the  skill  and  intelligence  of  the  laborers,  just  as  the 
bed  of  a  lake  is  changed  by  the  action  of  the  water 
within  it,  tlien  the  influence  of  the  different  civiliza- 
tions upon  the  field  of  employment  must  be  determined 
before  it  can  be  known  how  an  increase  of  population 
will  affect  the  average  return  for  labor.  I  shall  es- 
pecially strive  to  show  that,  as  the  law  of  rent  has  not 
been  correctly  apprehended,  the  field  of  employment 
enlarges  when  the  intelligence  and  efficiency  of  labor 
is  increased,  and  that  the  highest  average  return  for 
labor  is  compatible  with  the  greatest  possible  popula- 
tion ;  while,  on  the  other  hand,  whatever  diminishes  the 
average  return  for  labor  also  limits  the  field  of  em- 
ployment so  that  only  a  smaller  population  than  before 
can  be  supported. 

Tiie  real  cause  of  the  present  social  distress  is  to  be 
found  in  the  prevailing  sentiment  regarding  the  con- 
sumption of  wealth,  and  especially  of  food.  Nature 
is  not  equally  productive  of  all  kinds  of  wealth,  and 
men  cannot  expect  to  choose  those  forms  of  wealth  of 
which  nature  is  least  productive  and  receive  the  same 
reward  as  if  they  chose  for  consumption  those  articles 
supplied  most  abundantly  by  nature.  Men  complain 
of  the  niggardliness  of  nature,  when  really  the  only 
thing  wrong  is  the  universal  disposition  on  the  part  of 
men  to  prefer  those  forms  of  wealth  of  which  nature 
is  least  productive,  instead  of  other  commodities  of 


INTRODUCTION.  15 

which  nature  offers  a  generous  supply.  As  soon  as  the 
productive  power  of  men  is  increased,  it  is  not  used  to 
augment  their  supply  of  commodities,  but  to  enable 
them  to  obtain  articles  produced  by  nature  less  abun- 
dantly than  those  formerly  consumed.  Meat  is  de- 
manded instead  of  vegetable  food,  wheat-bread  instead 
of  rye-bread,  while  corn  is  mainly  used  as  animal  food 
or  for  making  whiskey,  and  tobacco  displaces  other 
crops  of  which  the  earth  is  more  productive.  The 
same  change  in  the  demand  for  commodities  causes  silk 
to  be  preferred  to  the  more  abundant  cotton,  seal-skin 
cloaks  to  be  chosen  instead  of  the  equally  useful  ones 
made  from  wool ;  and  on  all  sides  could  other  examples 
of  a  like  nature  be  pointed  out. 

I  am  well  aware  that  these  changes  are  often  looked 
upon  as  the  best  evidence  of  an  advancing  civiliza- 
tion, and  that  this  is  especially  true  in  England  and  in 
America.  The  Anglo-Saxon  race  pride  themselves  on 
the  fact  that  they  reject  the  greater  part  of  those  arti- 
cles of  food  which  the  land  cultivated  by  them  can 
produce.  They  love  a  diet  composed  almost  wholly 
of  beef  and  white  bread,  and  look  down  with  con- 
tempt upon  the  German  with  his  sausage  and  black 
bread,  the  Frenchman  with  his  soup  and  frogs,  and  all 
other  nations  that  have  a  diet  more  in  harmony  with 
the  natural  conditions  by  which  they  are  surrounded. 

It  is  not  my  purpose  to  endeavor  to  determine  which 


16  INTRODUCTION. 

of  these  races  has  the  most  resources  for  happiness. 
However  instructive  such  a  study  may  be,  as  an  econ- 
omist I  am  more  interested  in  studying  what  are  the 
effects  of  these  different  modes  of  the  consumption  of 
wealth  on  its  production  and  distribution.  We  can 
clioose  any  form  of  consumption,  but  we  cannot  avoid 
the  necessary  effects  which  accompany  our  choice. 
Every  soil  is  more  productive  of  some  one  crop  than 
of  another,  and  the  same  soil  will  produce  more  when 
used  for  a  variety  of  crops  than  when  one  only  is 
raised.  The  land  of  any  country  can  produce  a  certain 
quantity  of  each  kind  of  food  more  advantageously 
than  if  a  greater  or  less  quantity  were  demanded  for 
consumption.  When  all  the  land  is  put  to  its  most 
productive  use,  there  is  a  fixed  relation  between  the 
quantities  of  the  various  articles  produced,  and  if  more 
or  less  of  any  article  is  produced  than  its  proportional 
share,  the  gross  produce  of  the  whole  country  will  be 
diminished. 

We  have,  then,  two  distinct  types  of  civilizations, — 
the  one  in  which  those  things  are  desired  of  which 
nature  is  least  productive,  the  other  in  which  each  in- 
dividual conforms  to  those  external  conditions  neces- 
sary for  the  greatest  possible  production.  I  desire  to 
point  out  that  the  economic  laws  of  these  two  different 
civilizations  are  not  the  same,  and  that  the  doctrines 
whose  universality  is  asserted  by  the  English  school 


INTRODUCTION.  17 

of  economists  are  only  true  of  a  civilization  where  the 
mass  of  the  people  prefer  those  commodities  which  can 
be  produced  by  nature  only  in  relatively  small  quanti- 
ties. It  is  only  when  the  land  is  used  to  produce  a 
very  few  articles  of  food  that  the  E-icardian  theory  of 
rent  is  true,  and  it  is  only  in  those  nations  desiring  but 
a  small  variety  of  food  and  having  but  few  sources  of 
pleasure  where  the  tendency  to  increase  of  population 
is  so  great  as  to  be  injurious.  Under  these  conditions 
the  gross  and  average  return  for  labor  is  so  small  that 
a  low  class  of  laborers  become  a  necessity,  and  they 
can  be  utilized  only  by  a  large  scale  of  production 
making  the  laborers  dependent  upon  their  employers 
and  preventing  free  competition  through  the  combina- 
tion of  the  few  capitalists  who  control  each  industry. 
As  soon  as  a  nation  decides  the  use  for  which  its  land 
shall  be  employed,  it  determines  for  the  most  part  the 
character  of  its  inhabitants,  the  scale  of  its  industries, 
the  manner  in  which  its  wealth  shall  be  distributed, 
'and  the  degree  in  which  competition  shall  be  really 
free. 

Just  laws  for  the  distribution  of  wealth  cannot  com- 
pensate for  the  reduction  in  the  average  return  for 
labor  necessitated  by  a  choice  of  those  articles  of  food 
supplied  by  nature  in  but  very  limited  quantities.  So 
long  as  the  present  mode  of  consumption  continues, 

neither  the  nationalization  of  land  nor  even  the  appro- 
h  2* 


18  INTRODUCTION. 

priation  of  all  the  means  of  production  can  increase 
the  average  income  to  such  a  degree  as  to  make  its 
possessor  comfortable  and  happy.  The  losses  to  the 
laboring  classes  occasioned  by  an  unequal  distribution 
of  wealth  are  very  small  when  compared  with  what  is 
lost  through  a  disregard,  on  their  part,  of  the  conditions 
by  which  the  food-supply  is  increased.  When  they  com- 
ply with  these  conditions  not  only  will  they  obtain  all 
the  increase  of  produce,  but  they  will  also  set  in  motion 
causes  which  will  bring  to  them  the  greater  part  of  what 
is  now  enjoyed  by  the  other  classes.  The  economic 
conditions  making  desirable  the  nationalization  of  land 
and  other  more  socialistic  measures  are  those  which 
also  raise  rent  and  bring  about  such  a  struggle  for 
food  as  to  reduce,  wages  to  a  minimum.  Nowhere  can 
stronger  adherents  of  the  Ricardian  doctrines  be  found 
than  among  the  socialists,  and  this  is  because  their 
conception  of  natural  laws  accords  with  the  views  of 
Ricardo.  If  the  doctrines  of  Ricardo  are  not  univer- 
sally true,  a  civilization  is  possible  in  which  each  indi- 
vidual, by  complying  with  the  surrounding  external 
conditions,  can  obtain  all  that  reward  which  nature 
offers  for  labor  and  abstinence,  and  Avhen  men  comply 
with  these  conditions  they  will  no  longer  need  the 
above-mentioned  measures  to  insure  a  just  distribution 
of  wealth. 

If  the  social  theory  of  rent  is  correct,  it  is  necessary 


INTRODUCTION.  19 

to  explain  wliy  there  is  at  the  present  time  such  an  un- 
equal distribution  of  wealth,  and  why  wages  are  low 
when  they  might  be  high.  I  shall  show  that  when 
two  different  classes  of  laborers  representing  two  dif- 
ferent civilizations  contest  in  the  same  society  for  the 
occupation  of  the  field  of  employment,  the  power  to 
survive  depends,  not  on  a  higher  average  return  for 
labor,  but  on  the  surplus  which  can  be  given  as  rent, 
the  class  commanding  the  larger  surplus  getting  posses- 
sion of  the  field  of  employment.  That  class  of  laborers 
which  can  pay  the  highest  price  for  food  can  deprive 
others  of  the  necessary  means  of  support,  and  hence  ob- 
tain the  victory  in  the  contest.  For  a  higher  class  of 
laborers  to  displace  a  lower,  they  must,  in  a  state  of  free 
competition,  be  able  to  pay  more  for  food  and  still  have 
sufficient  incomes  remaining  to  maintain  that  stand- 
ard of  life  to  which  they  are  accustomed.  When  this 
cannot  be  done,  the  intelligence  and  skill  of  the  laborers 
are  reduced,  progress  and  the  increase  of  population  are 
checked,  and  society  becomes  stationary. 

The  ultimate  cause  of  the  present  low  return  for  labor 
is  not  to  be  found  in  the  niggardliness  of  nature,  but 
rather  in  the  combination  of  clieap  labor  and  low  inter- 
est, by  which  the  price  of  food  is  forced  so  high,  and 
the  value  of  other  commodities  so  low,  that  the  more 
intelligent  classes  are  driven  from  the  field  of  employ- 
ment, or  their  numbers  so  reduced  that  they  only  do 


20  IN  TROD  UCTION. 

work  with  which  cheap  labor  cannot  compete.  So  long 
as  nine-tenths  of  the  labor  of  any  society  can  be  per- 
formed by  a  very  low  class  of  laborers,  as  is  the  case  in 
our  present  industrial  state,  the  mass  of  the  people  will 
remain  ignorant  and  degraded,  unless  society  by  its  laws 
and  customs  prevents  the  success  of  that  combination 
which  is  the  chief  cause  of  our  present  evils.  A  higher 
social  state  cannot  be  attained  while  free  competition 
results  merely  in  a  displacement  of  the  higher  classes 
by  their  inferiors,  who,  having  no  desire  for,  or  appre- 
ciation of,  better  things,  can  force  the  price  of  food  so 
high  that  no  one  else  can  compete  with  them. 

In  the  first  chapters  of  this  work  the  problems  re- 
lating to  land,  population,  and  the  effect  of  increased 
production  on  the  average  return  for  labor  are  dis- 
cussed ;  and  then  free  competition,  the  causes  of  an 
unequal  distribution  of  wealth,  and  the  hinderances  to 
social  progress  are  considered,  and  some  of  the  means 
of  bettering  our  present  social  state  are  pointed  out. 


THE  PEEMISES 

OF 

POLITICAL    ECONOMY. 


CHAPTER    I. 


RENT. 


The   theory  of    rent  as   coraraonly  taught   makes 

diflPerences  of  soil  the  cause  of  reut.     As  some  soils 

are  more  fertile  than  others,  the  produce  is  raised  at 

different  costs  of  production,  so  that  if  the  price  of  the 

produce  is  high  enough  to  give  the  usual  profit  on  that 

portion  of  the  whole  crop  which  is  raised  at  greatest 

expense,  it  will  give  more  than  the  ordinary  profit  to 

those  portions  raised  at  less  expense.   There  will  tliere- 

fore  be  a  surplus  value  in  the  proceeds  from  some  lands 

beyond  what  will  cover  the  expenses  and  profits  of  the 

crops,  and  the  amount  of  this  surplus  is  said  by  Ricardo 

to  be  the  amount  of  the  rent. 

There  can  be  no  doubt  that  soils  of  different  degrees 

21 


22      THE  PREMISES  OF  POLITICAL  ECONOMY. 

of  fertility  are  in  cultivation,  but  whether  this  fact  is 
the  sole,  or  even  a  necessary,  condition  of  rent  may  well 
be  questioned. 

That  the  poorest  land  in  cultivation  should  pay  no 
rent  requires  that  there  should  be  no  other  purpose 
than  cultivation  to  which  the  laud  can  be  put.  This 
is  rarely  or  never  true,  as  man  does  not  subsist  alone 
on  cultivated  plants,  such  as  wheat,  oats,  and  corn, 
but  also  on  plants  that  require  no  cultivation,  and  on 
animals  that  can  live  on  uncultivated  land ;  he  also  has 
use  for  lumber  and  fuel,  and  the  trees  from  which  they 
are  obtained  grow  on  until  led  land.  When  land  is 
needed  for  cultivation  it  cannot  be  had  for  nothing, 
since  it  is  valuable  to  its  owners  for  other  purposes. 
Upon  uncultivated  land,  for  instance,  cattle  <ind  sheep 
can  be  kept.  Persons  who  wish  to  cultivate  land  must 
compete  with  those  who  wish  the  land  for  grazing  pur- 
poses, and  as  all  lands  that  can  be  cultivated  can  be 
used  for  pasture,  and  will  yield  the  usual  profit  and 
leave  something  for  rent,  those  who  wish  to  till  the 
land  must  be  able  to  bid  over  the  herders  in  their  offers 
of  rent.  The  same  is  true  in  regard  to  timber  land. 
Trees  will  grow  in  sufiBcient  quantities  on  all  land 
which  can  be  cultivated  more  than  to  repay  for  the 
labor  and  capital  needed  to  prepare  them  for  market, 
and  all  tillable  timber  lands  will  yield  a  rent  to  their 
owners.     Hence  persons  who  desire  to  obtain  this  land 


RENT.  23 

for  tilling  must  pay  more  rent  than  the  owners  can 
obtain  from  those  who  cut  wood. 

The  rent  of  uncultivated  land  does  not,  as  does  that 
of  cultivated  land,  depend  upon  the  differences  of  fer- 
tility. Cultivated  land,  whether  good  or  poor,  must 
be  ploughed  and  worked  just  the  same,  the  poor,  if 
there  is  a  difference,  needing  more  labor  than  the  good. 
Hence  the  cost  of  cultivation  is  by  the  acre,  while  the 
profit  is  according  to  fertility.  If  two  persons  raise 
equal  amounts  of  produce,  one  from  one  hundred 
acres,  the  other  from  two  hundred  acres  of  land,  he 
who  works  the  two  hundred  acres  should  pay  a  much 
lower  rent  than  the  other,  since  he  must  retain  a  double 
amount  to  repay  him  for  his  extra  cost  of  cultivation. 
But  in  grazing  the  case  is  different.  If  two  hundred 
acres  of  a  certain  land  will  keep  as  many  sheep  or 
cattle  as  one  hundred  acres  of  better  land,  the  two 
hundred  acres  of  poor  land  will  rent  for  as  much  as 
the  one  hundred  acres  of  good  land.  The  renter  of 
the  two  hundred  acres,  having  no  additional  expenses, 
is  at  no  disadvantage  in  competing  with  the  renter  of 
the  one  hundred  acres,  and  must  pay  as  much  rent. 
The  same  is  true  of  timber  land.  It  costs  no  more  to 
cut  a  quantity  of  wood  from  poor  than  from  good 
land.  The  rent  of  timber  lands  will  therefore  be  pro- 
portional to  the  timber  on  the  lands,  and  rent  can  be 
paid  for  the  poor  as  well  as  for  the  good. 


24      THE  PREMISES  OF  POLITICAL   ECONOMY. 

There  are  still  other  purposes  for  which  land  can  be 
used  profitably.  On  very  sterile  lands,  for  instance, 
wild  game  will  thrive,  which  will  more  than  repay  the 
cost  of  killing  and  bringing  to  market;  and  as  such 
game  is  often  killed  merely  for  sport,  poor  lands  are 
in  some  countries,  especially  in  England,  set  apart  solely 
for  hunting  preserves.  The  rich  men  who  own  these 
preserves  may  pay  more  for  sport  than  their  game 
would  fetch  in  market,  but  that  such  lands  would  yield 
a  rent  if  the  owners  wish  it  is  shown  by  the  fact  that 
men  violate  law  and  kill  game  in  these  preserves,  even  at 
great  risk.  There  would  certainly  be  no  poachers  if  the 
value  of  the  game  did  not  exceed  the  cost  of  killing  it. 

It  is  often  asserted  that  there  is  land  so  distant  from 
market  that  it  can  yield  no  rent.  In  new  countries 
this  may  sometimes  be  the  case,  but  distance  from 
market  will  not  of  itself  remain  a  permanent  reason 
why  any  land  cannot  pay  rent.  A  land-owner  has  a 
choice  of  local  and  distant  markets,  and  no  produce 
will  be  sent  to  a  distant  market  unless  the  price  there 
is  enough  higher  than  the  price  at  home  to  pay  cost  of 
transportation.  This  additional  price  can  usually  be 
paid,  since  production  on  a  large  scale  at  distant  places 
is  much  more  productive  than  local  industries  on  a 
small  scale.  Producers  on  a  small  scale  can,  however, 
offer  a  price  for  food  high  enough  to  yield  the  landlord 
a  considerable  rent,  and  more  than  this  rent  must  be 


RENT.  25 

offered  by  distant  producers  before  they  can  displace 
local  industries. 

In  view  of  these  facts,  it  is  clear  that  all  cultivated 
lands,  except  in  very  new  countries,  must  pay  rent. 
Even  the  poorest  land  cultivated  must  pay  rent,  for 
those  wishing  it  must  compete  with  those  who  want  it 
for  purposes  not  requiring  cultivation. 

The  Eicardian  theory  of  rent  supposes  that  the 
greatest  return  is  to  be  obtained  when  all  the  land  of 
a  country  is  cultivated.  This,  however,  is  not  true, 
since  from  all  the  land  of  a  country  less  produce  will 
be  obtained  than  if  only  a  part  is  cultivated.  To  have 
a  proper  rainfall,  it  is  necessary  that  a  large  part  of  the 
land  of  a  country  should  be  covered  with  trees,  and 
if  these  are  cut  away  to  bring  all  the  land  into  culti- 
vation, while  the  owners  of  the  forest  lauds  may  profit 
by  it,  the  owners  of  the  other  lands  will  lose  more 
than  the  first  gain,  and  on  the  whole  the  country  will 
lose,  since,  the  gross  production  being  diminished,  a 
less  population  than  before  can  be  supported.  When  the 
greater  part  of  a  country  is  cultivated,  the  way  to  support 
a  larger  population  is  not  through  increasing  the  area 
under  cultivation,  for  this  will  lessen  the  gross  return, 
but  through  improving  that  already  under  cultivation. 

The  effect  on  the  gross  return  of  the  country  of  till- 
ing poor  lands  instead  of  using  them  for  forestry,  is 
clearly  shown  by  the  floods  on  the  Ohio  and  Missis- 


26      THE  PREMISES   OF  POLITICAL   ECONOMY. 

sippi  Rivers.  At  the  sources  of  these  rivers  the 
forests  are  being  cleared  away  so  that  the  ground  may 
be  cultivated.  The  waters  of  these  rivers  are  precipi- 
tated so  rapidly  into  the  valleys  below  that  they  are  over- 
flowed, and  much  of  the  best  land  in  the  country  ren- 
dered useless  for  cultivation.  If  the  poorer  lands  on  the 
mountain-sides  are  cleared  and  cultivated  the  valley 
lands  cannot  be,  since  they  will  be  subject  to  overflow. 
As  a  result  there  will  be  a  movement  of  population 
from  the  fertile  valleys  to  the  sterile  hill  and  mountain- 
sides, and  a  reduction  of  the  gross  production  of  the 
country.  A  country  can  till  either  the  fertile  valleys 
or  the  sterile  mountain-sides,  but  not  both. 

Clearly,  then,  the  fact  that  there  are  untilled  lands 
in  a  country  does  not  prove  that  there  are  lands  in 
cultivation  which  yield  no  rent,  for  the  produce  of  a 
country  will  be  greater  when  certain  lands  are  not  cul- 
tivated but  are  covered  with  forests.  It  is  said  that 
one-fourth  of  the  land  of  a  country  should  be  in  forests. 
Although  this  proportion  may  be  too  large,  yet  the 
question  of  importance  is  not  what  is  the  relative  fer- 
tility of  the  worst  and  best  lands  in  a  country,  but 
what  is  the  fertility  of  the  better  lands  that  remain 
after  a  proper  portion  is  reserved  for  forests,  since 
the  poorest  lands  can  be  used  for  producing  trees,  and 
the  best  reserved  for  cultivation. 

The  most  important  objection  to  the  Ricardian  theory 


RENT.  27 

of  rent  is  tliat  lands  do  not  remain  in  the  same  ratio 
of  fertility  as  that  in  which  they  are  regarded  when 
they  are  first  brought  into  cultivation.  Ricardo  talks 
of  the  inexhaustible  qualities  of  the  soil,  and  later 
writers,  though  qualifying  his  statements  somewhat, 
still  hold  them  in  the  main.  All  soils  vary  with  time 
in  their  fertility;  bad  lands  become  good  by  proper 
treatment,  and  poor  usage  ruins  the  best  of  lands. 
Hence  lands  tend  strongly  to  an  equality  when  once 
brought  into  cultivation  ;  the  rich  lands  lose  most  in 
fertility  under  improper  tillage,  while  the  poor  lands 
gain  most  under  proper  tillage.  When  lands  are  badly 
cultivated,  much  more  strength  is  taken  from  the  good 
lands  than  from  the  poor,  and  they  will  therefore  lose 
their  fertility  more  rapidly.  If  wheat  is  raised  on 
three  grades  of  land  yielding  respectively  ten,  twenty, 
and  thirty  bushels  per  acre,  and  if  nothing  is  done  to 
replace  the  lost  qualities,  the  best  lands  will  decrease  in 
fertility  more  rapidly  than  the  others,  since  more  is 
taken  from  the  soil.  By  the  time  the  capacity  of  the 
poorest  land  is  reduced  to  nine  bushels  per  acre,  that 
of  the  better  lands  will  be  reduced  to  somethins;  like 
eighteen  and  twenty-seven  bushels,  and  under  continu- 
ous cultivation  without  manures  the  productivity  of  the 
lands  would  finally  be  on  a  par  with  that  of  the  poor  ; 
all  lands  thus  handled  would  become  equally  poor,  and 
rent  from  diflFerences  of  soil  would  cease. 


28      THE  PREMISES   OF  POLITICAL   ECONOMY. 

On  the  other  hand,  if  lands  are  properly  cultivated, 
the  poor  lands  will  increase  in  fertility  more  rapidly 
than  the  rich.  I  have  shown  that  if  nothing  is  re- 
turned to  the  land  it  will  soon  become  worthless 
through  exhaustion.  When  lands  are  properly  culti- 
vated a  return  is  made,  but  this  return  is  made  to  the 
land  from  which  it  was  taken.  If  one  field  yields 
twenty  bushels  an  acre  and  another  thirty  bushels,  a 
farmer  will  not  put  three  loads  of  manure  on  the  good 
field  to  two  on  the  poor  field,  but  Avill  place  most  of 
the  manure,  if  not  all,  for  a  time  at  least,  on  the  poor 
field,  which  will  gradually  yield  more  proportionally, 
and  the  difference  in  rent  between  the  two  fields  will 
gradually  lessen,  and  probably  at  length  entirely  cease. 

Variations  in  the  rate  of  interest  or  wages  change 
the  value  of  lands.  We  call  at  present  land  in  Kansas 
poor  in  comparison  with  land  in  New  York,  but  this  is 
not  because  the  same  labor  will  not  produce  as  much  in 
Kansas  as  in  New  York,  but  because  interest  and  wages 
are  higher  in  Kansas,  so  that  land  of  equal  fertility  in 
the  two  States  will  not  yield  the  same  rent.  But  when 
interest  and  wages  in  Kansas  fall  to  their  level  in  New 
York,  the  land  of  both  States  will  be  classed  as  good, 
and  the  differences  of  rent  will  cease  or  at  least  decrease. 

The  distribution  of  population  also  affects  our  esti- 
mation of  the  value  of  land.  When  a  country  is  new, 
sparsely  settled,  and  distant  from  a  market,  lands  of 


RENT.  29 

great  fertility  will  be  classed  as  poor  which  a  few  gen- 
erations later,  when  the  population  has  much  increased, 
will  be  regarded  as  very  good,  and  yield  a  large  rent. 

In  like  manner  a  reduced  cost  of  transportation 
alters  our  estimation  of  the  value  of  land,  causing  us 
now  to  regard  lands  as  good  which  a  few  years  ago 
were  classed  as  non-rent-producing.  For  these  and 
similar  reasons  the  proportion  of  the  land  on  the  earth 
regarded  as  poor  is  constantly  decreasing. 

llicardo  and  his  school  always  speak  of  wheat  lands, 
barley  lands,  pasture  lands,  etc.,  as  if  each  field  was  good 
for  one  crop  alone,  and  would  be  most  profitable  to  its 
owner  only  when  used  in  the  cultivation  of  this  particu- 
lar crop.  Nothing  can  be  more  false  than  this  view  of 
the  case.  If  any  field  is  used  to  grow  one  crop  only, 
it  will  decrease  in  fertility  and  soon  yield  little  or  no 
rent.  Nothing  in  agriculture  is  better  established  than 
the  necessity  of  a  rotation  of  crops  to  prevent  a  loss  of 
fertility.  For  this  reason  the  value  of  land  cannot  be 
estimated  by  what  it  will  produce  of  any  one  crop. 
An  average  must  be  struck  from  all  the  crops  which 
must  be  raised  to  obtain  the  proper  rotation.  The 
fact  that  of  a  particular  crop  a  piece  of  land  will  yield 
no  more  than  enough  to  pay  the  cost  of  cultivation 
does  not  show  that  no  rent  can  be  paid  for  such  land. 
Let  us  suppose  that  for  a  certain  field,  wheat,  corn, 

grass,  and  pasture  would  give  a  proper  rotation  of 

3* 


30      THE  PREMISES  OF  POLITICAL   ECONOMF. 

crops.  If  a  follower  of  Ricardo  should  pass  by  the 
field  when  sovvu  to  wheat,  he  would  see  some  poor 
spots,  and  say  that  there  is  land  which  yields  no  rent. 
The  next  year  he  would  see  poor  spots  likewise  in  the 
corn  crop,  and  on  the  following  years  in  the  land  when 
used  for  a  meadow  and  pasture,  and  from  this  would 
assert  that  although  the  farmer  paid  rent  for  all  the 
land  the  rent  of  some  of  it  was  only  nominal,  and  that 
here  accordingly  was  a  margin  of  cultivation  which 
yielded  no  rent.  A  careful  examination  would  reveal 
that  the  poor  spots  in  the  wheat  were  not  those  in  the 
meadow ;  that  where  no  corn  grew  there  was  splendid 
pasture ;  that  in  dry  years  the  poor  spots  are  here,  in 
wet  years  there ;  in  short,  that  in  a  series  of  years  every 
part  may  be  in  turn  regarded  as  good  and  bad,  and  that 
the  farmer  can  afford  to  pay  rent  for  all,  since  some  time 
during  the  series  of  years  each  part  will  make  more  than 
a  return  for  labor  and  capital  expended  upon  it. 

The  plausibility  of  the  Ricardian  theory  arises  from 
the  temporary  circumstances  attending  the  extension  of 
cultivation.  In  this  country,  first  it  was  New  York 
that  was  on  the  margin  of  cultivation,  then  it  was 
Ohio,  then  Illinois,  and  now  it  is  Kansas  and  Ne- 
braska ;  soon  it  will  be  Montana  and  other  far-off  ter- 
ritories. But  none  of  these  places  stay  at  the  margin 
of  cultivation,  and  soon  rent  makes  its  appearance,  and 
will  in  time  become  as  high  as  in  the  oldest  States. 


RENT.  31 

None  of  the  differences  wliich  tend  to  augment 
rent  are  of  a  permanent  cliaracter;  they  are,  on  the 
contrary,  of  a  very  changeable  nature.  The  order  in 
which  the  lands  were  brought  into  cultivation  affords 
no  clue  as  to  our  present  estimation  of  them.  It  may 
be  granted  that  when  we  are  obliged  to  extend  the  area 
of  cultivation  we  always  take  what  we  regard  the  best 
of  the  uncultivated  lauds;  but  when  these  lands  are 
once  cultivated  for  a  series  of  years  we  cannot  say  they 
yield  no  rent  because  they  were  last  brought  into  culti- 
vation. Our  estimation  of  their  value  has  most  prob- 
ably changed  in  the  mean  time.  If  a  country  is  in  a 
progressive  state,  all  these  differences  of  fertility  will 
diminish,  and  probably  in  time  cease ;  all  land  increas- 
ing in  fertility  under  better  conditions,  the  poorer  ones, 
however,  more  rapidly,  being  most  susceptible  of  im- 
provement. 

As  I  have  stated  before,  I  do  not  deny  all  the  as- 
sumptions of  the  current  theory  of  rent.  I  dispute 
only  the  one  which  claims  that  the  price  of  the  whole 
crop  is  determined  by  the  cost  of  producing  that  por- 
tion raised  at  the  greatest  expense.  The  proof  of  this 
proposition  is  often  presented  in  the  following  man- 
ner :  If  the  price  of  produce  was  not  sufficient  to 
cove  •  this  cost  with  ordinary  profit  there  would  be 
no  inducement  for  farmers  to  continue  the  produc- 
tion of  this  the  most  costly  portion  of  the  crop,  and  a 


32      THE  PREMISES  OF  POLITICAL   ECONOMY. 

farmer  will  not  continue  to  produce  at  a  loss ;  on  the 
other  hand,  if  the  price  was  more  than  sufficient  to 
give  the  ordinary  rate  of  profit  new  lands  would  be 
brought  into  cultivation,  until  the  price  of  produce 
would  be  reduced  to  the  cost  of  producing  the  most 
costly  part.  In  this  argument  there  is  a  fact  of  great 
importance  overlooked  which,  when  rightly  considered, 
will  change  the  whole  view  of  the  case.  There  is 
much  labor  to  be  performed  before  land  can  be  culti- 
vated. The  land  must  be  cleared  of  timber,  it  must 
be  drained,  stones  and  other  obstructions  must  be  re- 
moved, and,  lastly,  the  land  must  be  ploughed  and  the 
ground  prepared  before  a  crop  can  be  raised.  If  these 
facts  were  not  true,  if  the  new  land  could  be  cultivated 
with  no  more  trouble  than  the  old  lands  can  be  changed 
from  one  crop  to  another,  then  we  might  be  able  to 
predict  that  the  poorest  land  would  go  out  of  cultiva- 
tion when  the  price  of  produce  fell,  and  that  more 
would  be  cultivated  when  the  price  rose.  But  nothing 
of  the  sort  can  be  predicted.  When  new  land  is 
brought  into  cultivation  the  price  must  be  high 
enough  to  remunerate  satisfactorily  those  preparing  the 
land  for  tillage,  besides  paying  the  cost  of  cultivating  the 
crop ;  but  the  land  being  once  tillable,  it  will  not  cease 
to  be  used  so  long  as  the  price  of  produce  will  repay 
the  cost  of  cultivation  alone.  What  has  been  expended 
in  bringing  the  laud  into  cultivation  cannot  be  with- 


RENT.  33 

drawn,  nor  will  the  land  be  withdrawn  from  cultiva- 
tion because  no  return  is  obtained  for  this  expenditure. 
Let  us  consider  carefully  the  difference  between  these 
two  elements,  the  one  necessary  to  bring  land  into  cul- 
tivation, the  other  to  keep  it  there.  If  three  thousand 
dollars  must  be  expended  to  prepare  a  given  farm  for 
cultivation,  and  two  thousand  dollars  and  the  labor  of 
two  men  are  required  to  cultivate  it,  then  the  farm 
will  not  be  brought  into  cultivation  until  the  price  of 
produce  will  be  sufficient  to  pay  the  wages  of  two  men 
and  the  interest  on  five  thousand  dollars ;  but  when 
the  land  is  once  cultivated,  it  will  not  be  withdrawn  so 
long  as  the  price  of  produce  is  sufficient  to  pay  the 
wages  of  the  two  laborers  and  the  interest  on  two 
thousand  dollars.  In  other  words,  there  might  be  a 
fall  in  price  of  produce  equal  to  the  interest  on  three 
thousand  dollars  without  a  reduction  in  the  quantity 
of  food  produced.  When  lands  have  been  once  cleared 
of  timber  and  brought  into  a  proper  state  for  cultiva- 
tion that  work  is  done  once  for  all,  and  the  capital  and 
labor  SQ  expended  become  intermingled  with  the  nat- 
ural qualities  of  the  soil.  The  revenue  which  the 
owner  receives  for  such  expenditure  is  properly  to  be 
regarded  as  rent,  for  it  is  governed  by  the  laws  of  rent. 
Whether  or  no,  return  can  be  obtained  for  capital  thus 
expended  must  depend  on  the  causes  which  determine 
rent,  and  not  on  those  which  determine  interest ;  and 


34      THE  PREMISES   OF  POLITICAL   ECONOMY. 

the  fact  that  no  return  is  obtained  for  money  once  ex- 
pended has  no  tendency  to  reduce  the  amount  of  pro- 
duction. But  with  the  circulating  capital  used  on  the 
farm  the  case  is  different :  if  no  return  is  obtained  it 
will  be  withdrawn  and  cultivation  cease.  Buildings, 
fences,  etc.,  when  once  made,  do  not  last  forever,  but 
must  constantly  be  renewed,  and  if  the  price  of  pro- 
duce falls  so  that  the  ordinary  profit  is  not  obtained 
ou  this  capital,  it  will  gradually  be  withdrawn  and 
production  will  be  in  this  way  checked  or  reduced. 

It  is  clear,  therefore,  that  the  laws  which  regulate 
the  bringing  of  new  lands  into  cultivation,  and  those 
according  to  which  land  will  be  withdrawn  from  culti- 
vation, are  very  different,  and  that  there  is  a  large 
margin  within  which  the  price  of  produce  may  vary 
without  a  change  in  the  quantity  produced.  Econo- 
mists usually  confuse  two  very  different  things  in  their 
arguments  on  this  point.  When  they  say  that  a  capi- 
talist will  not  bring  new  lands  into  cultivation  unless 
the  price  of  produce  is  sufficient  to  pay  the  cost  of 
production,  under  this  cost  is  included  not  only  the 
cost  of  the  labor  necessary  to  cultivate  the  land,  but 
also  enough  more  to  repay  him  for  the  cost  of  prepar- 
ing the  land.  When,  however,  they  say,  if  the  price 
of  produce  is  not  sufficient  to  repay  the  cost  of  pro- 
duction land  will  be  withdrawn  from  cultivation,  the 
term  cost  of  production  must  be  understood  to  exclude 


RENT.  35 

the  cost  of  bringing  the  land  into  cultivation,  and  to 
include  only  a  remuneration  for  the  labor  expended 
and  interest  for  the  circulating  capital.  Let  us  suppose 
that  sixty  cents  a  bushel  as  the  price  of  wheat  suffices 
to  repay  the  cost  of  production, — -in  other  words,  that 
such  a  price  will  properly  remunerate  labor  and  pro- 
vide the  interest  on  the  circulating  capital, — and  that 
twenty  cents  on  each  bushel  is  needed  to  pay  the 
interest  on  the  capital  expended  in  bringing  the  laud 
into  cultivation.  Then  the  price  of  wheat  must  rise  to 
eighty  cents  before  new  land  will  be  brought  into  culti- 
vation, but  must  fall  below  sixty  cents  before  any  land 
will  be  withdrawn.  No  changes  in  price  between  these 
figures,  sixty  and  eighty  cents,  will  affect  the  quantity 
of  wheat  produced. 

If  we  keep  these  facts  in  mind  we  will  see  how 
faulty  are  the  arguments  supporting  the  doctrine  that 
the  price  of  the  whole  crop  is  determined  by  the  cost 
of  producing  that  portion  which  is  produced  at  the 
greatest  expense.  There  is  always  a  large  margin 
between  the  price  which  will  remunerate  those  who 
bring  new  land  into  cultivation  and  that  which  will 
cause  land  to  be  withdrawn  from  cultivation.  This 
margin  is  larger  in  old  countries  than  in  new  ones,  as 
those  lands  to  the  cultivation  of  which  the  obstructions 
are  the  least,  which  require  the  least  clearing,  draining, 
etc.,  will  be  the  first  cultivated,  the  subsequent  addi- 


36      THE  PREMISES   OF  POLITICAL   ECONOMY. 

tions  being  necessarily  made  from  lands  more  clifficult 
of  preparation.  Prairie  land  will  be  cultivated  before 
wooded  lauds,  high  and  dry  lands  before  low  and  wet, 
lands  naturally  rich  before  those  which  require  manures 
to  render  them  tillable.  As  the  demand  for  food  in- 
creases the  price  of  produce  necessary  to  cause  new 
lands  to  be  cultivated  increases,  but  the  price  which 
must  be  paid  to  prevent  land  from  being  thrown  out 
of  cultivation  tends  to  become  lower  than  before,  since 
every  improvement  lessens  the  cost  of  production  on  all 
the  cultivated  land.  Thus  if  in  a  new  country  sixty 
cents  for  wheat  be  the  lowest  limit  of  possible  fluctua- 
tion at  that  time  and  eighty  cents  the  upper  limit,  as 
the  country  grows  older  and  the  demand  for  food  in- 
creases the  upper  limit  will  rapidly  rise  to  one  dollar, 
one  dollar  and  twenty  cents,  one  dollar  and  forty  cents, 
and  so  on,  while  the  lower  limit  will  probably,  through 
improved  cultivation,  slowly  decline  to  fifty-nine  cents, 
fifty-eight  cents,  and  still  lower  figures.  For  this  rea- 
son, as  the  demand  for  food  increases  the  farther  will 
its  price  be  from  the  cost  of  cultivating  the  poorest  land 
that  has  been  prepared  for  tillage,  and  a  knowledge  of 
this  cost  will  not  enable  us  to  determine  what  is  the 
rent  of  the  better  grades  of  land. 

The  increase  of  the  margin  of  fluctuation  of  values 
as  the  land  of  a  country  is  gradually  brought  into  use, 
causes  the  price  of  food  to  change  more  rapidly  and 


RENT.  37 

to  a  greater  amount  than  where  only  the  easily  culti- 
vated land  is  in  use.  If  the  supply  of  food  exceeds 
the  demand,  the  price  falls  below  the  lower  limit  before 
the  supply  will  be  reduced.  On  the  other  hand,  a  slight 
deficiency  of  the  supply  will  force  the  price  above  the 
upper  limit,  since  there  will  be  no  increase  in  the 
amount  of  land  cultivated  until  this  limit  is  reached. 
Mineral  products,  following  the  same  law  that  agricul- 
tural produce  does,  show  much  more  clearly  the  effect 
of  the  increase  of  the  margin  of  fluctuation.  The 
mines  which  are  easily  opened  and  prepared  for  use 
are  first  worked,  and  those  having  greater  obstructions 
are  resorted  to  when  more  mineral  products  are  de- 
sired. An  increased  demand  for  mineral  products 
causes  so  high  a  price  that  new  mines  with  great  ob- 
stacles to  their  use  must  be  opened,  but  once  in  use 
these  mines  can  be  worked  at  so  low  a  cost  that  the 
supply  of  mineral  products  will  be  reduced  only  after 
a  great  fall  in  their  price. 

Gold  and  silver,  being  minerals,  must  also  in  time 
lose  that  firmness  of  value  which  has  thus  far  made 
them  so  valuable  as  money.  The  supply  from  sources 
having  but  few  obstructions  either  is,  or  soon  will  be, 
exhausted,  and  resort  must  be  had  to  mines  requiring 
much  labor  to  open  them  up.  The  effect  on  the  value 
of  silver  of  the  opening  up  of  costly  mines  has  been 

very  marked  during  the  last  few  years.      From  the 

4 

308053 


38      THE  PREMISES   OF  POLITICAL   ECONOMY. 

present  low  price  of  silver,  however,  we  cannot  justly 
infer  that  the  permanent  cost  of  production  has  been 
reduced.  The  supply  of  silver  has  exceeded  the  de- 
mand, and  as  there  are  no  mines  in  use  which  have  a 
high  cost  of  production,  a  great  decline  of  price  was  a 
necessary  consequence.  When  the  mines  now  in  use 
are  exhausted  the  price  will  probably  rise  above  its 
former  price,  with  a  liability  of  another  great  fall  in 
value  when  new  mines  are  brought  into  use. 

During  modern  times  the  rapid  increase  in  the  de- 
mand for  food  has  kept  its  price  steadily  at  the  upper 
limit.  There  are,  however,  at  the  present  time  many 
indications  that  this  will  not  be  true  in  the  future. 
We  are  probably  nearing  a  period  when  the  changes 
in  the  value  of  food  will  be  as  rapid,  and  to  as  great 
an  amount,  as  is  now  the  case  with  mineral  products. 
A  slight  change  in  the  relation  of  the  supply  to  the 
demand  will  occasion  a  great  change  in  the  value  of 
food  wherever  there  is  but  little  or  no  land  at  the  mar- 
gin of  cultivation,  which  will  be  withdrawn  from  use 
when  the  price  begins  to  fall. 

In  opposition  to  the  theory  of  Ricardo  I  offer  the  fol- 
lowing, which  will,  I  think,  be  found  more  in  harmony 
with  all  the  facts.  Lands  vary  chiefly  in  two  ways, 
in  fertility  and  in  the  amount  of  obstructions  necessary 
to  be  removed  in  order  that  they  may  be  cultivated. 
Under  obstructions  are  classed  all  hinderances  which, 


RENT.  39 

when  once  removed,  do  not  require  a  continual  outlay 
of  capital  and  labor  to  keep  the  land  fit  for  cultiva- 
tion. All  land  must  be  drained,  and  most  of  it  must 
be  cleared  of  timber  and  stones,  and  other  like  ex- 
penses must  be  incurred.  When,  however,  this  is  once 
done,  no  outlay  of  capital  and  labor  is  needful  beyond 
the  regular  expense  of  cultivation.  When  a  country 
is  first  settled  the  lands  least  obstructed  are  first  culti- 
vated, as  the  population  increases,  and  new  lands  with 
greater  obstructions  to  cultivation  must  be  tilled,  the 
price  of  produce  must  rise,  since  no  one  will  bring  any 
land  into  cultivation  unless  the  price  of  produce  is  suf- 
ficient not  only  to  repay  the  annual  cost  of  cultivation, 
but  also  to  give  him  the  interest  on  the  money  laid  out 
in  subduing  the  land.  Every  increase  in  the  demand 
for  food  requires  the  cultivation  of  more  land,  and  this 
cannot  be  done  until  the  price  rises  enough  to  repay 
the  cost  of  bringing  in  new  lauds.  This  cost  is  con- 
stantly increasing,  the  least  obstructed  lands  naturally 
being  brought  first  into  cultivation. 

Besides  the  obstructions  to  the  cultivation  of  land 
there  are  differences  of  fertility,  but  these  are  very  lim- 
ited in  their  nature  and  would  not  alone  ever  cause  a 
very  large  rise  in  the  price  of  produce.  Fields  sloping 
to  the  north  are  not  so  fertile  as  those  sloping  to 
the  south,  upland  is  not  so  fertile  as  valleys,  in  some 
places  clay  land  may  not  be  as  good  as  sandy  land,  and 


40      THE  PREMISES   OF  POLITICAL   ECONOMY. 

iu  other  places  sandy  land  is  inferior  to  clay,  and  so 
through  all  the  categories  of  difference.  In  a  very 
early  stage  of  the  growth  of  a  country  all  these  kind? 
of  land  were  cultivated,  and  when  afterwards  new  land 
is  brought  into  cultivation,  the  obstructions  having 
been  removed,  it  falls  into  a  class  of  lands  already 
cultivated,  and  has  no  greater  annual  cost  of  cultiva- 
tion than  other  lands  of  the  same  class  previously 
tilled. 

As  is  well  known,  Mr.  Carey- contends  that  the 
course  of  cultivation  is  always  from  the  thin  high 
lands  to  the  rich  bottom-lands,  which  cannot  be  at  first 
cultivated  by  reason  of  their  unhealthfuluess  and  of 
the  great  and  prolonged  labor  necessary  for  clearing 
and  draining  thcra.  Whether  this  is  always  true,  or 
true  often  enough  to  be  regarded  the  general  rule,  is  a 
matter  of  no  moment  to  my  position.  What  I  con- 
tend is  that  at  a  time  when  the  price  of  food  was  low 
our  ancestors  did  cultivate  as  poor  lands  as  any  that 
are  now  left  uncultivated,  and  that  therefore,  if  the 
price  should  again  fall  to  what  it  then  was,  poor  lands 
would  not  go  out  of  cultivation.  That  our  ancestors 
cultivated  high  and  thin  land  on  the  hills  John  Stuart 
Mill  does  not  attempt  to  deny,  but  he  asserts  that  at 
the  present  time  in  all  old  countries,  as  England  and 
France,  all,  or  nearly  all,  the  fertile  lands  are  culti- 
vated, and  that  the  extension  of  cultivation  is  from 


RENT.  41 

the  plains  to  the  hills.  This  is  doubtless  true,  but  it 
must  be  remembered  also  that  some  of  the  lands  ou 
these  same  hills  are  already  cultivated  and  have  been 
for  centuries,  and  that  the  lands  yet  uu tilled  when 
once  prepared  for  cultivation  are  no  poorer  than  those 
first  cultivated,  the  extension  of  cultivation  having 
been  from  the  hills  to  the  valleys,  and  then  back  to 
the  hills.  Why  the  hills  should  be  first  cultivated  is 
very  apparent.  The  hills  afforded  better  means  of 
defence,  they  were  healthier,  and  from  the  stand-point 
of  our  ancestors,  obstructions  to  cultivation  were  there 
the  least.  These  were  all  important  facts  to  our  fore- 
fathers, who  had  many  enemies,  poor  tools,  and  few 
means  of  resisting  disease. 

However,  in  the  course  of  time,  when  our  ancestors 
had  obtained  more  knowledge  and  had  the  requisite 
security  through  improved  government,  they  settled  in 
the  valleys  and  obtained  a  better  return  for  their  labor 
on  the  more  fertile  lands.  But  when  they  cultivated 
the  valleys,  why  were  not  the  less  productive  hill-sides 
abandoned  ?  There  can  be  but  one  reply.  The  per- 
manent cost  of  production  must  have  been  a  low  one. 
The  labor  which  had  been  expended  to  bring  them  into 
cultivation  was  permanently  fixed  and  could  not  be 
withdrawn.  The  lands  continued  to  be  cultivated  be- 
cause a  return  was  obtained  on  the  labor  and  capital 

annually  expended  on  them,  but  no  new  lands  of  this 

4* 


42      THE  PREMISES   OF  POLITICAL   ECONOMY. 

class  could  be  brought  into  cultivation  so  long  as  some 
of  the  more  fertile  valleys  were  unused.  When  the 
valley  lands  were  all  cultivated,  and  more  food  was 
needed  on  account  of  increased  population,  the  price 
of  food  rose,  so  that  it  became  profitable  to  cultivate 
new  lands  on  the  hills.  In  other  words,  the  price  of 
food  was  high  enough  to  pay  the  annual  cost  of  pro- 
duction and  leave  enough  to  pay  the  interest  on  the 
money  expended  to  bring  the  lands  into  cultivation.  It 
must  not  be  forgotten,  however,  that  hill  lands  have 
been  in  cultivation  for  centuries,  and  these  new  lands 
will  have  no  greater  annual  cost  of  cultivation  than 
those  formerly  tilled  have,  and  this  cost  must  be  a  low 
one,  as  they  were  cultivated  when  the  price  of  food  was 
at  the  lowest  point  of  which  we  have  any  knowledge. 

All  circumstances,  whatever  they  be,  which  prevent 
new  lands  from  being  cultivated,  but  are  no  longer 
operative  when  lands  are  once  in  cultivation,  I  term 
obstacles  to  the  extension  of  cultivation,  and  it  is  to 
these,  and  not  to  differences  of  fertility,  to  which  the 
constantly-increasing  price  of  food  must  be  attributed. 

I  will  now  present  in  summary  the  facts  which  stow 
the  defects  of  the  current  theory  of  rent. 

First.  To  obtain  uncultivated  land  for  tillage,  far- 
mers must  compete  with  those  who  can  afford  to  pay 
rent  for  uncultivated  land  by  using  it  for  pasture,  for 
wood,  and  many  other  similar  purposes.      For  this 


RENT.  43 

reason  the  poorest  land  in  cultivation  must  pay  rent, 
since,  if  the  farmers  would  not  pay  rent,  the  landlords 
would  let  it  to  herders  and  others  who  could  afford  to 
give  much  for  the  use  of  uncultivated  land. 

Second.  The  greatest  return  is  not  obtained  when 
all  the  land  of  a  country  is  cultivated.  There  is  great 
need  of  forests  to  secure  a  proper  rainfall,  and  hence 
the  question  is  not  what  is  the  difference  between  the 
best  land  of  a  country  and  the  poorest,  but  what  is  the 
difference  in  the  soils  after  the  poorest  are  set  aside  for 
forests,  poor  lands  being  as  useful  for  forests  as  the 
good.  When  the  proper  amount  of  land  is  reserved 
there  can  be  no  doubt  but  that  the  remainder  is  fer- 
tile enough  to  yield  a  considerable  rent. 

Third.  The  disadvantages  of  an  unfavorable  situa- 
tion alone  can  never  cause  any  land  to  pay  no  rent. 
Home  industries  on  a  small  scale  are  always  productive 
enough  to  offer  a  price  for  food  sufficient  to  yield  con- 
siderable rent,  and  more  than  this  price  must  be  ob- 
tained before  food  will  be  sent  to  distant  markets. 

Fourth.  The  fertility  of  land  is  not  a  fixed  quan- 
tity, but  by  poor  culture  all  lands  soon  become  equally 
poor,  while  with  a  proper  culture  all  lands  improve 
rapidly,  and  even  the  poorest  are  soon  fertile  enough 
to  pay  a  large  rent. 

Fifth.  The  mass  of  the  so-called  poor  lands  do  not 
lack  fertility,  but  are  rated  poor  because  in  our  present 


44      THE  PREMISES  OF  POLITICAL   ECONOMY. 

estimation  their  situation  is  unfavorable,  because  inter- 
est and  wages  are  high,  or  the  cost  of  transportation  is 
great,  and  for  other  reasons  which  affect  their  present 
desirableness.  Most,  if  not  all,  of  these  circumstances 
have  their  cause  in  the  present  distribution  of  popula- 
tion, and  as  population  in  the  vicinity  of  these  lands 
increases  they  will  yield  a  large  rent  and  be  classed  as 
good  lands. 

Sixth.  There  are  many  obstructions  to  cultivation 
which  must  be  removed.  "While  the  price  of  produce 
must  be  high  enough  to  remunerate  the  capitalists  who 
remove  them  and  prepare  the  ground  for  cultivation, 
when  they  are  once  removed,  the  price  of  produce  may 
fall,  and  yet  these  lands  will  not  be  withdrawn  from 
cultivation. 

Each  of  these  facts  shows  plainly  the  defects  of 
the  Ricardian  theory  of  rent,  but  when  we  consider 
them  together  they  display  much  more  glaringly  the 
deficiencies  of  this  theory,  which  attributes  all  rent  to 
the  original  differences  of  soils.  The  original  fertility 
of  the  soil  is  an  element  of  but  little  relative  impor- 
tance, since  the  obstacles  which  retard  the  cultivation 
of  inferior  lands  are  no  longer  in  operation  when  these 
lands  are  once  brought  into  use. 

One  important  problem  in  the  discussion  of  rent  I 
have  purposely  omitted.  Does  the  demand  for  com- 
modities, and   the  kind  and  variety  of  the  food  con- 


RENT.  45 

sumed,  affect  rent  by  changing  our  estimate  of  the 
relative  value  of  lands  differing  in  soil  and  climate? 
No  solution  of  the  rent  question  can  be  had  without  a 
consideration  of  this  important  problem,  but  as  the 
points  involved  are  remote  from  those  treated  in  the 
foregoing  discussion,  I  will  consider  them  separately  in 
the  following  chapter. 


CHAPTER    II. 

THE   SOCIAL    CAUSES    PRODUCING  A   HIGH    PRICE   OP 

FOOD. 

Thus  far  only  the  physical  capacities  of  the  earth 
to  produce  food,  and  the  conditions  on  which  increased 
quantities  of  food  can  be  obtained,  have  been  examined. 
Now  I  wish  to  call  attention  to  the  importance  of  the 
reaction  of  the  consumption  on  the  production  of 
wealth,  and  to  the  influence  which  the  economy  of  the 
food-supply  exerts  on  production.  The  current  theory 
is  that  consumption  has  no  influence  on  production, 
and  that  a  demand  for  commodities  is  not  a  demand 
for  labor.  It  determines  merely  the  direction  of  labor, 
but  not  the  quantity  or  efficiency  of  the  labor,  or  the 
total  aggregate  of  wealth  produced.  This  proposition 
is  set  down  by  most  economists  as  one  of  the  most  fun- 
damental and  best  established  doctrines  of  Political 
Economy.  This  subject,  like  many  others  in  Political 
Economy,  is  much  obscured  by  the  nature  of  the  at- 
tack to  which  the  current  doctrine  has  been  subjected, 
by  wiiich  the  attention  of  economists  has  been  diverted 

from  the  real  issue  involved  to  questions  almost  frivo- 
46 


CAUSES  PRODUCT  NO   HIGH  PRICE   OF  FOOD.    47 

lous.  It  is  against  the  popular  notion  that  the  extrav- 
agance of  tlie  rich  is  a  blessing  to  the  poor,  by  giving 
them  employment,  that  the  arguments  of  economists 
have  been  directed,  and  in  so  doing  they  have  laid 
down  propositions  which,  while  strong  enough  to  with- 
stand the  opposition  met  with  on  popular  grounds,  are 
very  weak  when  examined  from  another  and  more 
reasonable  point  of  view. 

I  shall  first  show  the  influence  which  changes  in  the 
demand  for  commodities  have  on  the  aggregate  pro- 
duction whenever  the  change  is  from  a  commodity 
which  nature  can  produce  less  abundantly  to  one  capa- 
ble of  being  produced  more  abundantly.  Of  some 
commodities  nature  can  produce  more  than  of  others, 
and  if  the  more  abundant  are  demanded  a  greater  pop- 
ulation can  be  supported,  and  for  their  labor  a  greater 
proportional  return  can  be  had,  than  if  something 
yielded  by  nature  less  abundantly  was  demanded.  On 
a  given  area  more  rye  can  be  obtained  for  the  same 
labor  than  wheat,  and  more  corn  and  potatoes  than  rye, 
and  in  many  climates  more  rice  than  corn  or  potatoes. 
Hence  if  corn  or  potatoes  are  demanded  for  food  in- 
stead of  rice,  a  much  smaller  population  can  be  sup- 
ported, and  a  still  smaller  if  rye  is  wanted,  while 
wheat  will  support  the  smallest  population  of  all. 
But  this  is  not  all,  for  by  examining  the  laws  of  nature 
more  closely  we  shall  find  that  the  abundance  in  which 


48      THE  PREMISES  OF  POLITICAL   ECONOMY. 

nature  can  produce  given  articles  varies  with  the 
changes  of  climate  and  soil.  Some  climates  and  soils 
are  naturally  adapted  to  wheat,  some  to  oats,  others  to 
rye,  barley,  or  potatoes,  and  still  others  to  rice,  sugar, 
and  other  tropical  products,  while  other  parts  are  best 
fitted  for  the  pasture  of  cattle.  If  this  is  true,  a 
change  in  the  demand  for  food,  from  commodities  of 
which  under  the  circumstances  nature  can  produce  but 
small  quantities  to  those  which  can  be  produced  in 
greater  abundance,  will  increase  both  the  gross  and 
average  return  for  labor,  and  at  the  same  time  bring 
about  a  more  equal  distribution  of  wealth.  Let  us 
suppose  the  demand  for  wheat  has  been  so  great  as  to 
cause  not  only  all  natural  wheat  lands  to  be  sown  to 
wheat,  but  also  some  of  the  potato  lauds.  This  would 
not  only  cause  a  much  greater  proportional  expenditure 
of  labor  than  if  a  less  quantity  of  wheat  was  demanded, 
but  also  a  great  increase  of  rent  on  the  good  wheat 
lands,  all  of  which  would  come  out  of  the  consumers' 
revenue.  If  the  demand  for  food  should  change  so 
that  less  wheat  and  more  potatoes  were  wanted,  the 
price  of  wheat  would  fall,  the  demand  being  supplied 
from  a  better  class  of  wheat  land  than  before,  while 
the  price  of  potatoes  would  not  rise,  or  at  least  not  rise 
as  much  as  the  price  of  wheat  fell.  The  community 
then  would  have  a  double  gain,  less  labor  would  be 
required   to   supply  its   demand   for   food,   and   rent 


CAUSES  PRODUCING  HIGH  PRICE   OF  FOOD.   49 

would  fall;  lands  poor  in  their  capacity  to  produce 
wheat  being  no  longer  cultivated  for  wheat  but  for 
potatoes,  for  which  they  are  especially  adapted. 

Ricardo,  in  discussing  the  causes  of  rent,  views  the 
whole  world  as  used  for  the  production  of  a  single 
article,  and  because  any  one  article  cannot  be  raised  on 
all  soils  and  in  every  climate  at  an  equal  cost  of  labor, 
he  grades  all  land  according  to  its  power  of  producing 
some  one  article,  and  then  shows  that  rent  will  rise  as 
lands  less  fitted  for  the  production  of  this  article  are 
used  for  its  production.  Certainly  if  the  people  de- 
mand only  wheat,  for  instance,  as  food,  they  must  pay 
a  high  rent ;  but  this  does  not  prove  that  an  increase 
of  population  necessitates  a  rise  of  rent.  Suppose  there 
are  four  classes  of  land,  of  which  the  first  is  best 
adapted  for  wheat,  the  second  for  rye,  the  third  for 
corn,  and  the  fourth  for  potatoes.  If  only  one  article 
were  in  demand,  so  that  all  the  four  classes  of  land 
must  be  used  for  its  production,  every  extension  of 
cultivation  would  be  accompanied  by  a  rise  in  the  price 
of  food.  On  the  other  hand,  if  all  of  these  articles 
were  desired,  and  the  demand  for  each  article  was  in 
proportion  to  the  land  best  fitted  for  its  production, 
there  would  be  no  rent  from  differences  in  fertility,  or  at 
least  much  less  rent  than  if  only  one  article  were  pro- 
duced. The  rise  of  rent  merely  shows  that  there  is 
too  much  of  some  one  kind  of  food  demanded,  and 


50      THE  PREMISES   OF  POLITICAL  ECONOMY. 

does  not  prove  that  more  food  cannot  be  obtained 
without  increasing  the  cost  of  production. 

Besides  the  difference  of  climate  and  soil,  the  rota- 
tion of  crops  has  a  great  effect  on  the  quantity  pro- 
duced, and  to  have  a  proper  rotation  there  must  be  a 
demand  for  all  the  products  required  for  the  rotation ; 
and  a  change  in  the  demand  for  commodities  which 
allows  a  better  rotation  of  crops  causes  a  much  greater 
quantity  of  food  to  be  obtained  with  no  greater  ex- 
penditure of  labor. 

If  nature  produces  some  articles  of  food  more 
abundantly  than  others,  and  some  articles  grow  more 
advantageously  in  one  climate  or  soil  than  in  others, 
and  if  any  soil  will  produce  a  variety  of  articles  by  a 
rotation  of  crops  in  greater  abundance  than  one  article, 
the  population  which  a  country  can  support  cannot  be 
determined  without  a  knowledge  of  what  the  inhab- 
tants  will  demand  for  food.  A  much  greater  popula- 
tion can  be  provided  with  subsistence  if  they  demand 
for  food  what  nature  can  produce  most  abundantly 
than  if  they  demand  something  of  which  nature  can 
supply  but  a  very  limited  quantity.  So  much  has  this 
fact  been  misunderstood  that  many  economists  have 
maintained  that  those  nations  prospered  best  who  used 
the  most  expensive  food.  The  use  of  wheat  and  beef 
is  regarded  as  indications  of  a  high  standard  of  life, 
while  the  use  of  potatoes  and  rice  is  looked  upon  as  the 


CAUSES  PRODUCING   HIGH  PRICE   OF  FOOD.    51 

cause  of  the  misery  and  degradation  of  the  countries 
which  use  thera  as  the  chief  articles  of  diet.  There  is 
a  seeming  justification  of  this  view  in  the  conditions 
of  those  countries  which  use  a  cheap  and  abundant 
kind  of  food.  India,  Egypt,  and  Ireland,  where  po- 
tatoes, rice,  and  other  like  articles  of  food  are  used, 
have  a  much  lower  standard  of  life  than  England, 
where  wheat,  beef,  and  other  food-stuSs,  which  cannot 
be  supplied  by  nature  except  in  more  limited  quan- 
tities, are  demanded.  Wherever  the  tendencies  pro- 
ducing an  unequal  distribution  of  wealth  are  strong 
there  can  be  no  doubt  that  a  nation  runs  a  great 
danger  in  the  introduction  of  a  cheap  article  of  food, 
since  by  the  use  of  such  a  food  the  probabilities  of 
increasing  the  effects  of  the  unequal  distribution  are 
much  augmented.  So  long  as  a  dear  kind  of  food  is 
used,  those  of  the  laborers  who  wish  to  better  their 
condition  can,  by  using  a  cheaper  food  themselves,  ob- 
tain a  great  advantage,  which  will  aid  them  much  to- 
wards their  improvement ;  if,  however,  all  the  laborers 
use  the  cheaper  food,  those  desiring  to  save  have  no 
advantage,  and  are  thus  practically  without  hope  of 
improvement,  and  all  remain  in  a  low  and  degraded 
state,  while  the  few  to  whom  the  benefit  of  an  unequal 
distribution  comes  enjoy  all  the  produce  of  the  in- 
dustry of  the  people.  On  the  other  hand,  if  there 
is  no  danger  of  an  unequal  distribution,  or  if  a  nation 


52      THE  PREMISES   OF  POLITICAL   ECONOMY. 

adopt  proper  means  to  overcome  the  tendencies  in  this 
direction,  the  advantages  of  cheap  food  are  very  ap- 
parent, as  a  much  greater  population  can  be  supported 
with  a  much  less  expenditure  of  labor  than  when  only 
dear  food  is  used. 

The  use  of  cheap  food  must  not  be  confounded  with 
the  use  of  a  single  article,  such  as  potatoes  or  rice,  for 
a  diet;  for  the  laws  of  nature  are  so  arranged  that  a 
mixed  diet  is  always  the  cheapest.  For  a  time  land 
will  produce  one  article,  such  as  potatoes  or  wheat,  very 
abundantly,  but  the  fertility  will  soon  decrease  unless 
the  crop  is  changed  and  some  other  article  is  raised, 
since  only  by  a  proper  rotation  of  crops  can  the  fertil- 
ity of  the  soil  be  maintained  or  increased.  So,  too,  as 
climates  and  soils  are  different,  nations  can  supply  their 
wants  by  exchange,  and  get  many  articles  of  food  with 
less  labor  than  if  they  attempted  to  raise  them  at 
home.  The  cheapest  food  tHen  will  contain  all  the 
variety  necessary  to  support  life,  and  will  be  in  har- 
mony with  the  tastes  and  inclinations  of  all  who  are 
willing  to  adjust  themselves  to  the  natural  conditions 
by  which  the  gross  and  average  return  for  labor  is 
increased. 

Even  when  the  amount  of  the  food-supply  is  known 
the  number  of  the  population  which  it  supports  cannot 
be  determined,  unless  it  is  also  known  what  commodities 
this  population  will  demand.     Some  commodities  are 


CAUSES  PRODUCING   HIGH  PRICE   OF  FOOD.    53 

richer  in  food-material  than  others,  and  tlie  consumption 
of  these  will  create  a  larger  demand  for  land  than  the 
consumption  of  the  others,  and  if  such  articles  be  used, 
only  a  much  smaller  population  can  be  supported.  It 
is  usually  regarded  as  axiomatic  by  economists  that 
each  person  requires  a  fixed  quantity  of  food,  and  when 
the  food-supply  is  known  the  amount  of  the  population 
can  be  inferred ;  but  this  is  not  true.  Food  is  not  only 
used  to  support  life,  but  is  also  largely  consumed  for 
the  mere  pleasure  which  the  consumption  gives,  so  that 
almost  every  one,  if  he  has  the  means,  consumes  two  or 
three  times  as  much  as  is  needed  for  the  preservation  of 
life  and  health.  Wherever  this  is  done  not  only  is  the 
population  much  reduced,  but  also  the  sum  of  the  pleas- 
ures to  be  obtained  by  each  one  is  greatly  diminished, 
since  other  pleasures  of  a  diiferent  kind  are  lost  when 
the  food  is  consumed  instead  of  being  converted,  as  it 
may  be,  into  other  kinds  of  enjoyment.  The  pleasure 
derived  from  food  is  exclusive,  and  is  only  enjoyed 
by  the  person  who  consumes  the  food,  while  many 
other  pleasures  can  be  enjoyed  by  a  great  number  with- 
out any  more  expenditure  of  labor  than  if  they  were 
produced  for  the  pleasure  of  one  person.  The  different 
sources  of  enjoyment  presented  by  a  pleasant  dinner 
illustrate  clearly  the  various  degrees  of  exclusiveness 
which  different  pleasures  possess.  The  floral  decora- 
tions, the  table  furniture,  and  the  tasteful  preparation 

5* 


54      THE  PREMISES   OF  POLITICAL   ECONOMY. 

of  the  food  can  be  enjoj^ed  by  all  alike.  These  pleasures 
do  not  depend  on  the  amount  of  food  as  do  the  pleas- 
ures procured  by  consuming  the  edible  dishes.  The 
latter  pleasures  are  exclusive  and  demand  an  increase 
of  food  for  each  additional  person  enjoying  it. 

Compare,  again,  the  pleasure  derived  from  beer  and 
music.  For  each  additional  glass  of  beer  additional 
labor  is  required,  and  if  a  double  quantity  is  demanded, 
twice  the  amount  of  labor  is  needed  in  general  to  pro- 
duce it.  This  increase  of  expense  is  not  true  of  music, 
since  a  large  number  of  persons  can  be  entertained 
with  music  by  an  orchestra  with  no  more  labor  than  if 
the  number  was  small.  That  one  enjoys  the  music  does 
not  debar  another  from  a  like  enjoyment,  but  the- 
enjoyment  of  both  is  rather  increased  by  the  fact  that 
they  have  a  common  pleasure.  The  same  lack  of  ex- 
clusiveness  in  consumption  is  true  of  books, — a  book 
that  would  exchange  for  twenty  glasses  of  beer  can  be 
enjoyed  in  turn  by  a  thousand  people,  while,  if  the 
beer  had  been  purchased  instead  of  the  book,  but 
twenty  of  the  thousand  would  have  had  any  enjoy- 
ment, and  the  rest  would  have  been  excluded.  Art  is 
also  similar  to  music  and  books  in  tiie  amount  of 
pleasure  that  can  be  derived  from  a  small  expenditure 
of  labor  and  of  the  food-supply.  So  many  persons 
cannot  enjoy  a  painting  simultaneously  as  can  enjoy  a 
piece  of  music,  but  as  the  painting  lasts  for  a  long 


CAUSES  PRODUCING  HIGH  PRICE   OF  FOOD.    55 

time  while  the  music  does  not,  the  painting  is  in  time 
capable  of  giving  as  much  pleasure  at  as  little  cost  as 
can  be  obtained  by  any  other  means. 

The  examples  which  have  been  given  lie  at  the  ex- 
tremes in  regard  to  labor  and  the  consumption  of  food 
necessary  to  produce  a  given  amount  of  pleasure. 
Beer  and  other  articles  of  like  character  require  the 
greatest  amount  of  labor  and  consumption  of  food, 
while  music,  books,  and  art  require  the  least,  in  propor- 
tion to  the  amount  of  pleasure  obtained.  Between 
these  extremes  are  innumerable  other  commodities, 
some  requiring  more  and  others  less  labor  and  con- 
sumption of  food  in  their  production,  and  thus  they 
approximate  one  or  the  other  of  the  class  of  commodi- 
ties above  mentioned. 

The  number  of  acres  required  to  produce  the  food 
and  liquor  of  each  person  determines  the  population 
of  any  section  and  the  demand  for  labor.  If  the  aver- 
age person  requires  twenty  acres  to  produce  what  he 
eats  and  drinks,  there  is  but  one-half  the  demand  for 
labor  that  there  would  be  if  he  consumed  only  the  pro- 
duce of  ten  acres  and  exchanged  the  produce  of  the 
other  ten  acres  with  artisans  for  other  commodities. 
This  fact  can  be  well  illustrated  by  taking  many  parts 
of  the  South,  where  every  farmer  has  a  still  to  make 
his  own  liquor,  and  raises  his  own  tobacco  and  corn, 
but  has  little  or  no  exchange  with  the  outside  world. 


56      THE  PREMISES   OF  POLITICAL  ECONOMY. 

Suppose  in  such  a  society  there  should  be  a  change  of 
demand  from  liquor  and  tobacco  to  clothes.  This  de- 
mand for  cloth  would  cause  an  increased  demand  for 
labor.  All  the  labor  formerly  employed  to  produce 
the  tobacco,  and  grain  for  liquor,  would  now  be  em- 
ployed in  raising  food  for  the  cloth-makers,  while  more 
cloth  must  be  made  to  supply  the  increased  demand. 
If  now  the  people  desired  good  houses,  and  reduced 
their  consumption  of  food  in  the  form  of  liquor  and 
tobacco  still  more,  they  would  permit  the  population 
to  increase,  and  the  additional  laborers  could  find  em- 
ployment in  building  houses. 

There  is  another  important  circumstance  affecting 
the  consumption  of  food  in  the  degree  of  exclusiveness 
of  family  life.  Where  each  family  lives  in  seclusion, 
having  a  private  house,  preparing  its  own  food,  and 
doing  all  other  work  without  any  co-operation,  the 
consumption  of  the  food -supply  is  many  times  greater 
than  it  would  be  if  the  same  families  should  so  live  as  to 
allow  the  proper  degree  of  division  of  labor.  Certainly 
in  the  cooking  and  serving  of  food  alone  at  least  half 
of  it  is  wasted  or  rendered  worthless  by  the  inefficiency 
of  the  labor  employed  in  private  life.  It  is  a  neces- 
sary disadvantage  of  private  life  that  the  labor  be  un- 
skilled, as  no  person  can  wash,  cook,  and  perform  all 
the  other  work  of  a  family  with  as  little  waste  and  as 
eflBciently  as  the  labor  could  be  performed  under  con- 


CAUSES  PRODUCING  HIGH  PRICE   OF  FOOD.   57 

ditions  where  each  person  is  engaged  in  one  occupation 
only.  Where  bread  is  made  in  a  bakery,  the  same 
material  will  make  much  more  bread  and  of  a  better 
quality  than  vvhere  each  family  bakes  for  itself.  For 
example,  take  the  difference  in  this  respect  between 
America  and  Germany.  In  Germany  all  bread  is 
made  in  a  bakery,  while  in  America  most  of  it  is 
baked  at  home.  It  is  no  exaggeration  to  say  that  Ger- 
man rye-bread  is  more  palatable  than  the  wheat-bread 
served  up  on  the  ordinary  American  table.  It  is  only 
when  furnished  Avith  the  finest  qualities  of  wheat-flour 
that  the  ordinary  cook  can  produce  edible  bread,  while 
a  baker  can  produce  a  better  article  with  the  poorest 
of  wheat.  The  same  waste  is  true  of  every  department 
of  private  life,  and  when  the  present  mode  of  living 
becomes  modified  so  as  to  allow  a  greater  division  of 
labor,  there  will  be  an  important  economy  of  the  food- 
supply,  and  a  much  larger  population  will  be  provided 
with  subsistence  without  an  increase  of  cost. 

The  amount  of  labor  that  can  be  employed  in  a 
country  depends  on  the  economy  of  the  food-supply, 
and  any  change  in  consumption  from  commodities 
which  draw  largely  on  the  food-supply  to  those  re- 
quiring less  land  for  their  production,  creates  a  de- 
mand for  additional  labor,  and  allows  for  an  increase 
of  population.  So  also  a  change  in  the  demand  from 
commodities  which  give  only  brief  pleasure  to  those 


58      THE  PREMISES   OF  POLITICAL   ECONOMY. 

giving  pleasure  for  a  longer  time,  or  to  more  persons 
at  one  time,  will  increase  the  demand  for  labor  and  the 
gross  amount  of  pleasures  to  be  enjoyed  by  the  people. 
Clothes  last  for  enjoyment  a  longer  time  than  tobacco. 
A  change  of  demand  from  tobacco  to  clothes  will  not 
only  increase  the  demand  for  labor,  but  also  the  amount 
of  pleasure  to  be  enjoyed,  since  by  the  additional  labor 
more  is  produced,  and  what  is  produced  gives  pleasure 
for  a  longer  time  than  the  former  product.  In  the 
same  way  a  demand  for  beautiful  houses  instead  of  fine 
clothes  adds  to  the  amount  of  the  pleasures  which  any 
community  has  to  enjoy,  since  houses  last  longer  than 
clothes,  can  be  enjoyed  by  many  at  the  same  time,  and 
do  not  draw  so  largely  on  the  food-supply,  while  public 
parks,  museums,  libraries, and  musical  concerts  encroach 
still  less  on  the  food-supply,  as  they  are  most  permanent 
in  their  effects,  and  the  enjoyment  of  them  by  one  per- 
son does  not  exclude  the  enjoyment  of  them  by  others. 
As  each  individual  demands  commodities  that  will 
require  the  use  of  additional  land  for  their  production, 
or  as  he  consumes  his  wealth  in  a  manner  which 
excludes  others  from  enjoying  his  wealth  with  him, 
the  demand  for  land  increases  and  rent  and  the  price 
of  food  rise.  An  unequal  distribution  of  wealth  is  the 
result,  and  this  cause  brings  about  other  changes,  which 
increase  still  further  the  demand  for  land  and  raise 
the  price  of  food.     Rich  jjersons,  as  a  class,  do  not 


CAUSES  PRODUCING  HIGH  PRICE   OF  FOOD.   59 

desire  commodities  so  much  for  the  pleasure  which 
can  be  derived  from  them  as  for  the  display  of  their 
wealth.  It  is  the  rareness  of  an  article  which  makes 
it  desirable  to  them.  Cheap  things  which  all  may 
have  are  passed  by,  and  commodities  are  sought  after 
of  which  there  are  not  enough  to  supply  the  wants  of 
every  person.  This  spirit  soon  pervades  all  classes, 
each  person  desiring  articles  rarer  and  more  costly  than 
those  lower  in  life  can  aflPord  to  purchase.  Fashion- 
able articles  are  desired  and  new  clothes  are  purchased 
before  utility  demands  a  change,  thus  causing  a  great 
waste  of  labor  and  material.  The  desire  to  excel 
others  is  also  visible  in  the  desire  of  the  rich  to  have 
all  their  amusement  in  private,  although  a  multitude 
might  have  the  pleasure  without  increase  of  cost. 
Their  libraries,  their  art  collections,  their  parks,  must 
be  their  exclusive  property,  not  because  their  pleasure 
is  thereby  increased,  but  because  the  possession  of  such 
treasures  is  beyond  the  means  of  ordinary  people. 
This  desire  for  rare  and  costly  articles,  especially  when 
accompanied  by  the  desire  of  individuals  to  have  them 
for  their  exclusive  use,  creates  a  demand  for  land  and 
raises  the  price  of  food.  So  long  as  this  spirit  prevails 
to  as  great  a  degree  as  at  present,  the  present  high  price 
of  food  will  continue;  and  this  spirit  must  cease  before 
cheap  food  and  an  equal  distribution  of  wealth  are 
possible. 


60      THE   PREMISES  OF  POLITICAL   ECONOMY. 

The  effect  of  a  change  of  demand  from  commodi- 
ties requiring  a  large  consumption  of  the  food-supply 
to  those  better  economizing  it,  is  as  marked  on  the 
distribution  of  wealth  as  on  the  production.  Let  us 
suppose  ten  men  worlcing  together,  four  of  whom 
produce  the  food-supply,  while  six  are  engaged  in 
making  other  articles  desired  for  consumption.  Each 
man  would  have  a  right  to  one-tenth  of  what  is  pro- 
duced, and  as  the  amount  of  food  produced  is  but 
four-tenths  of  the  gross  production,  any  four  of  the 
men  could,  by  taking  all  their  share  in  food,  exhaust 
the  whole  supply  and  leave  the  other  six  without  food. 
The  knowledge  or  fear  that  they  would  do  this  would 
break  up  the  whole  social  arrangement  and  cause  each 
one  to  work  by  himself,  or  the  price  of  food  would  rise 
and  that  of  other  commodities  fall  until  there  was  no 
danger  that  any  one  would  demand  more  than  his  share 
of  food.  No  one  could  live  without  food,  and  every  one 
would  give  the  whole  produce  of  his  labor  rather  than 
perish ;  hence  if  the  six  engaged  in  other  than  agricul- 
tural pursuits  were  determined  to  exchange  what  they 
produced  for  food  alone,  they  would  reduce  the  value 
of  their  produce  until  the  whole  produce  of  each  would 
procure  but  one-tenth  of  the  food-supply,  which  is  the 
same  amount  that  they  would  have  received  had  they 
in  the  first  place  consented  to  an  equitable  exchange 
and  not  endeavored  to  obtain  only  food  for  their  pro- 


CAUSES  PRODUCING   HIGH  PRICE   OF  FOOD.    61 

ductions,  while  they  have  lost  the  share  of  one  an- 
other's production  which  they  would  have  obtained  by 
a  just  division. 

If  each  person  increases  his  demand  for  food,  either 
the  number  of  the  people  in  a  country  must  be  reduced, 
or  a  greater  part  of  the  labor  must  be  devoted  to  the 
production  of  food.  In  either  case  there  is  a  decline  of 
civilization,  as  where  nothing  but  food  is  produced, 
however  abundant  it  may  be,  there  is  no  civilization, 
and  such  a  society  will  be  low  and  ignorant.  This 
shows  that  there  is  a  condition  to  a  high  civilization 
which  is  nearly  always  overlooked.  A  high  civiliza- 
tion requires  that  the  labor  of  each  should  be  ex- 
changed for  much  more  than  enough  to  support  the 
laborer,  but  he  must  not  endeavor  to  obtain  food  in 
exchange  for  all  his  labor.  The  amount  of  food  for 
which  the  labor  of  each  will  exchange  is  the  measure 
of  his  wages.  It  shows  how  many  of  the  laborers  can 
be  spared  from  the  production  of  food  to  produce  other 
articles.  For  each  laborer,  however,  to  endeavor  to  ob- 
tain food  for  all  his  wages  would  destroy  the  civiliza- 
tion, or  cause  such  an  unequal  distribution  of  wealth  that 
the  wages  of  each  would  only  suffice  to  purchase  the 
amount  of  food  necessary  for  existence.  If  the  people 
in  any  society  do  not  choose  to  scatter,  and  each  one  raise 
food  for  himself,  they  must  content  themselves  with 
the  food  necessary  for  their  support,  and  each  take  his 


62      THE  PREMISES   OF  POLITICAL  ECONOMY. 

share  of  the  other  commodities  produced,  or  they  will 
force  upon  themselves  such  an  unequal  distribution 
of  wealth  that  their  wages  will  furnish  them  but  a  bare 
living.  The  latter  alternative  is  what  most  societies 
take,  and  as  a  result  wages  are  at  a  minimum  and  the 
price  of  food  high.  Every  one  endeavors  to  get  more 
than  his  share  of  food,  and  as  there  is  no  way  in  which 
the  part  can  be  made  equal  to  the  whole,  they  obtain 
no  more  than  if  they  had  consented  to  take  an  equi- 
table share,  and  at  the  same  time  they  lose  all  their 
share  of  the  other  products  of  labor. 

The  demand  for  commodities  of  which  nature  can 
produce  but  very  limited  quantities,  and  the  desire  for 
food  to  be  consumed  for  mere  pleasure  over  and  above 
what  is  sufficient  to  maintain  health,  are  the  important 
causes  of  the  high  price  of  food.  Many  times  the 
present  amount  of  food  might  be  obtained,  with  no 
increase  of  the  proportional  cost,  if  the  people  would 
be  content  with  a  diet  containing  the  diffiirent  articles 
of  food  in  that  proportion  which  will  allow  the  land 
to  be  employed  in  the  production  of  those  commodities 
for  which  it  is  best  fitted ;  and  the  same  food  would 
supply  many  times  the  present  population  if  it  were 
only  used  to  preserve  health,  and  not  consumed  in  ad- 
ministering to  an  appetite  for  intoxicating  drinks  or 
otherwise  wasted  through  ignorance  and  a  lack  of 
appreciation  of  what  iuexclusive  pleasures  are. 


CAUSES  PRODUCING  HIGH  PRICE   OF  FOOD.    63 

In  addition  to  these  limitations  of  the  food-supply 
caused  by  ignorance  and  prejudice,  there  are  still  greater 
contractions  of  the  field  of  employment  produced  by 
the  lack  of  appreciation  of  future  as  contrasted  with 
present  rewards,  and  hence  capital  is  not  accumulated 
to  the  proper  amount,  and  the  resources  of  all  coun- 
tries are  but  partially  developed.  To  emigrate  to  new 
countries  also  requires  capital,  and  where  wages  are 
low  and  the  people  ignorant,  they  have  not  the  means, 
and  often  not  even  the  desire,  to  go  where  wages  are 
high  and  food  is  cheap.  Thus  the  very  fact  that  the 
price  of  food  is  high  prevents  the  increase  of  food,  as 
it  causes  an  unfavorable  distribution  of  wealth  and  an 
increase  of  ignorance,  and  prevents  such  a  distribution 
of  population  as  would  increase  the  supply  of  food  and 
remedy  the  unequal  distribution  of  wealth. 

In  this  connection  only  a  reference  can  be  made  to 
another  important  cause  of  the  high  price  of  food,  as  a 
subsequent  chapter  will  be  devoted  to  its  discussion. 
When  there  is  free  competition,  the  power  of  producers 
to  survive  does  not  depend  on  the  gross  produce  of  in- 
dustry, nor  on  the  efficiency  of  their  labor,  but  on  the 
surplus  which  can  be  given  as  rent.  If  the  produce 
of  one  class  of  laborers  is  but  one-half  that  of  another 
class,  the  first  class  will  displace  the  second  if  they  de- 
mand less  than  one-half  the  wages.  As  the  wants  of 
cheap  and  inefficient  laborers  are  small,  and  their  rate 


64      THE  PREMISES   OF  POLITICAL   ECONOMY. 

of  increase  is  rapid,  they  have  the  power  of-  under- 
selling when  furnished  with  capital  at  a  low  rate  of 
interest.  Paying  a  higher  price  for  food,  and  more  as 
rent,  they  drive  the  more  efficient  classes  out  of  the 
field  of  employment,  and  at  the  same  time  they  so  re- 
duce both  the  gross  return  for  industry  and  the  field  of 
employment  itself  that  a  much  smaller  population  can 
be  supplied  with  food  than  would  be  supported  by  the 
more  efficient  laborers  whom  they  have  displaced. 

For  these  reasons  it  is  evident  that  food  is  high  in 
price  not  because  any  limit  to  the  food-supply  has  been 
reached,  but  because  the  field  of  employment  is  so 
small  to  the  ignorant  and  inefficient  classes  demanding 
the  wrong  commodities,  and  not  willing  to  save  for 
themselves.  The  obstacles  to  the  increase  of  food  and 
population  are  not  physical  in  their  nature.  They  are 
the  result  of  ignorance  and  prejudice,  and  so  long  as 
they  continue  to  flourish  in  their  present  force  there 
cannot  but  be  a  high  price  for  food  and  an  unequal 
distribution  of  wealth. 

From  the  foregoing  discussion  it  will  be  seen  a  high 
price  of  food  is  not  the  result  of  a  pressure  of  popula- 
tion against  the  means  of  subsistence  that  could  be 
utilized  if  men  were  willing  to  conform  to  the  condi- 
tions imposed  by  nature  for  the  increase  of  the  food- 
supply.  Men  impose  unnatural  limitations  on  them- 
selves, and  thus  limit  their  field  of  employment,  and 


CAUSES  PRODUCING  HIGH  PRICE   OF  FOOD.    65 

as  a  result  they  must  pay  a  high  price  for  food.  Men 
have  a  tendency  to  reduce  their  food-supply  below  their 
actual  wants,  and  thus  cause  an  artificial  pressure  of 
population  upon  the  means  of  subsistence  which  they 
are  willing  to  utilize. 

This  tendency  to  limit  the  food-supply  is  true  not 
only  of  man,  but  of  all  animal  life.  The  pressure  of 
the  increase  of  animal  life  is  not  on  all  the  means  of 
subsistence,  but  only  on  those  kinds  of  food  which  can 
be  obtained  under  simple  conditions.  To  use  two 
or  more  sources  of  food  requires  more  intelligence  and 
a  higher  organism  than  does  the  use  of  but  one  kind 
of  food.  An  abundance  of  food  induces  animals  to 
use  only  those  kinds  of  food  which  can  be  obtained 
with  the  least  effort,  and  these  are  the  varieties  of  food 
which  can  be  obtained  under  the  simplest  conditions. 
For  food  obtained  under  simple  conditions  a  simple 
organism  is  the  fittest  organism,  and  the  instincts  which 
accompany  a  low  form  of  organic  life  lead  the  animal 
to  reject  all  sources  of  nourishment  except  those  whose 
conditions  are  so  simple  that  only  a  small  effort  will 
supply  its  wants.  Animals,  as  well  as  man,  have  a  ten- 
dency to  economize  labor,  and  an  economy  of  effort 
causes  a  decline  of  intelligence  where  the  wants  of  an 
animal  can  be  supplied  under  simple  conditions.  The 
simpler  the  organism  the  higher  is  its  rate  of  increase, 

and  the  increase  in  numbers   soon  causes  a  pressure 

e  6* 


(j6      THE  PREMISES  OF  POLITICAL   ECONOMY. 

upoD  the  means  of  subsistence  which  are  utiHzed.  The 
tendency  to  increase  and  the  tendency  to  limit  the  food- 
supply  are  thus  brought  into  conflict,  and  as  a  result  in 
those  animals  in  which  these  tendencies  are  weakest, 
some  of  the  instincts  and  habits  which  limit  the  food- 
supply  are  broken  down  and  a  new  species  is  formed, 
with  a  more  complex  organism,  capable  of  acquiring 
more  kinds  of  food,  or  the  same  food  under  more 
varied  conditions.  The  simplest  organisms,  not  the 
fittest  organisms,  tend  to  survive.  Only  when  the  in- 
crease of  simple  organisms  have  exhausted  the  food- 
supply  that  can  be  obtained  under  simple  conditions 
will  animal  life  develop  and  maintain  the  more  com- 
plex organisms  and  that  intelligence  necessary  for  their 
existence  where  food  can  be  obtained  only  under  com- 
plex conditions. 

Evolution  does  not  arise  from  a  primary  tendency  in 
animal  life  for  the  fittest  to  survive.  It  is  the  result 
of  two  apparently  injurious  tendencies, — the  tendency 
to  increase  and  the  tendency  to  limit  the  food-supply. 
These  two  tendencies,  always  operating  together,  cause 
the  simpler  organisms  in  whom  these  tendencies  are 
strongest  to  monopolize  the  means  of  subsistence  ob- 
tainable under  simple  conditions,  thus  forcing  those 
animals  in  whom  these  tendencies  are  weaker  into  more 
complex  environments,  where  higher  organisms  and 
more  intelligence  are  needed. 


CAUSES  PRODUCING  HIGH  PRICE   OF  FOOD.    Q^ 

In  the  original  man  the  tendency  to  limit  the  food- 
supply  can  be  clearly  seen,  and  in  all  the  various  social 
states  through  which  he  has  developed  up  to  the  pres- 
ent time  he  has  never  failed  so  to  limit  the  supply  of 
food  as  to  check  the  natural  growth  of  population,  and 
thus  bring  about  an  unequal  distribution  of  wealth. 
The  uncivilized  races  have  numberless  superstitions 
about  food  by  which  a  large  part  of  it  must  be  rejected, 
and  thus  the  supply  is  reduced.  Each  tribe  will  not 
eat  cattle  of  a  certain  color.  Here  striped  cattle  are 
prohibited  by  one  superstition;  there  the  spotted  ani- 
mals are  for  a  similar  reason  rejected,  and  travellers 
among  such  tribes  often  have  great  difficulty  in  feeding 
their  followers,  as  no  one  kind  of  food  can  be  pro- 
cured which  all  will  eat.  Large  quantities  of  food  are 
given  by  these  tribes  to  their  idols  or  gods ;  and  often 
their  departed  ancestors,  being  supposed  still  to  relish 
food,  must  be  conciliated  by  having  a  portion  of  what 
there  is  to  eat  set  aside  for  them.  At  the  same  time 
tiie  production  of  food  is  greatly  limited  by  other 
usages  and  customs,  which  prevent  the  use  of  many 
tracts  of  land  which  otherwise  would  probably  be 
cultivated. 

When  these  tribes  develop  into  nations  having  a 
higher  civilization  they  lose  many  of  these  supersti- 
tions and  customs  limiting  the  food-supply,  but  others 
are  retained,  or  adopted,  which  prevent  the  use  of  the 


68      "^SE  PREMISES   OF  POLITICAL  ECONOMY. 

greater  part  of  the  resources  offered  by  the  land  of  the 
country  for  the  production  of  food.  There  is  a  strong 
tendency  merely  to  utilize  some  one,  or  at  least  but  very 
few,  of  the  resources  which  might  be  developed.  Some 
nations  subsist  only  on  the  cattle  which  they  herd, 
others  cultivate  some  one  plant,  like  rice  or  potatoes, 
which  grow  almost  spontaneously  in  some  regions,  and 
still  others  live  almost  entirely  on  bread  and  meat, 
neglecting,  and  often  despising,  the  many  other  means 
of  subsistence  which  nature  has  placed  at  their  disposal. 
The  original  man  was  a  slave  to  his  appetites  and 
passions,  and  enjoyed  only  those  pleasures  which  are  of 
a  physical  nature.  As  he  did  not  conform  in  the  least 
to  the  demands  of  nature,  he  had  only  those  means  of 
subsistence,  such  as  berries,  fish,  and  game,  which  nature 
furnishes  without  labor.  A  partial  conformity  to  nature 
has  caused  the  cultivation  of  naturally  fertile  laud 
where  the  obstacles  to  cultivation  are  few.  Here,  how- 
ever, the  progress  of  civilization  has  been  stopped,  be- 
cause no  race  has  yet  been  willing  to  subordinate  the 
physical  and  exclusive  pleasures  of  life  to  those  ob- 
tained from  the  consumption  of  other  kinds  of  wealth 
which  would  so  harmonize  with  all  the  demands  of 
nature  as  to  allow  the  use  of  all  laud  in  the  most  pro- 
ductive manner,  and  thus  cause  the  removal  of  the 
more  formidable  obstacles  to  the  extension  of  cultiva- 
tion. 


CAUSES  PRODUCING  HIGH  PRICE   OF  FOOD.    69 

There  is  aa  obvious  connectiou  between  the  field  of 
employment  open  to  any  people  and  the  number  of 
qualities  in  them  which  are  sufficiently  developed  to 
influence  their  consumption.  To  those  who  desire  but 
few  things  which  thrive  without  labor  the  land  of  any 
country  can  furnish  only  a  small  supply  of  food,  and 
to  get  this  food  they  must  live  in  small  tribes  separated 
so  widely  from  one  another  that  little  commerce  or  di- 
vision of  labor  is  possible.  As  the  development  of  the 
qualities  inherent  in  men  cause  an  appreciation  of  new 
modes  of  consumption,  the  land  is  gradually  put  to 
more  productive  uses.  Additional  men  can  be  em- 
ployed in  agriculture,  and  the  better  cultivation  of  the 
land  will  allow  a  greater  proportion  of  the  whole  pop- 
ulation to  be  engaged  in  other  work  than  the  produc- 
tion of  food.  The  development  of  each  additional 
quality  in  men  causes  them  to  value  new  qualities  in 
land  capable  of  increasing  their  sources  of  enjoyment, 
induces  them  to  economize  food  so  as  to  be  better  able 
to  satisfy  their  new  desires,  and  leads  them  to  a  better 
appreciation  of  the  future,  which  makes  them  willing 
to  accumulate  more  capital  and  acquire  additional  skill. 
It  may  be  truly  said  that  the  development  of  each  ad- 
ditional quality  puts  mankind  in  a  new  world.  With 
its  aid  not  only  is  a  new  field  of  employment  dis- 
covered, but  the  old  one  has  a  different  aspect,  since 
all  its  qualities  are  valued  from  an  altered  and  more 


70      THE  PREMISES   OF  POLITICAL   ECONOMY. 

rational  stand-point.  Just  as  the  use  of  larger  and 
more  powerful  telescopes  continually  brings  into  view 
many-fold  more  stars  than  were  before  visible,  and  at 
the  same  time  gives  a  new  and  more  perfect  view  of 
those  formerly  observed,  so  also  the  gradual  bringing 
into  activity  of  new  qualities  in  men  causes  a  great  in- 
crease of  the  opportunities  to  labor,  and  an  enlarged 
return  for  labor  in  the  field  of  employment  before  in 
use. 

The  greater  the  conformity  to  nature  the  more  will 
all  the  qualities  in  land  be  brought  into  use,  and  the 
larger  will  be  the  ratio  of  the  good  land  to  the  poor. 
On  the  other  hand,  when  any  nation  endeavors  to  in- 
crease production  without  a  greater  conformity  to  nat- 
ural conditions  on  the  part  of  the  people,  there  will  be 
an  increasing  proportion  of  poor  land  as  compared  with 
the  good.  A  nation  first  cultivates  those  soils  which 
are  considered  by  the  people  to  be  the  best,  and  these 
are  always  those  where  food  can  be  obtained  under  the 
most  simple  conditions.  If  their  estimate  of  the  land 
does  not  change  on  account  of  a  better  adjustment  of 
themselves  to  nature,  they  can  supply  the  wants  of  an 
increasing  population  only  from  soils  less  fitted  than 
those  before  in  use  for  the  production  of  the  commod- 
ities desired  by  those  not  conforming  to  nature.  Only 
the  development  of  those  qualities  in  man  which  change 
his  estimate  of  land,  will  cause  an  increase  both  of  the 


CAUSES  PRODUCING   HIGH  PRICE   OF  FOOD.    71 

quantity  of  land  cultivated  and  of  the  ratio  of  tlie 
good  land  to  the  poor,  allowing  all  land  to  be  used  for 
what  it  is  best  fitted. 

From  the  qualities  of  the  soil  alone  cannot  be  deter- 
mined whether  or  not  a  given  tract  of  land  is  good 
land.  The  demand  for  food  and  the  use  which  is 
made  of  capital  and  skill  are  likewise  important  factors 
in  determining  our  estimate  of  land.  For  this  reason 
rent,  when  accompanied  by  a  high  price  of  food,  is  not 
the  result  of  a  natural  monopoly.  It  is  caused  by  the 
survival  of  classes  or  races  who,  contrary  to  nature,  en- 
deavor to  use  the  whole  world  for  the  production  of  a 
few  articles  of  food  of  which  but  small  quantities  can 
be  grown,  and  who  adhere  to  methods  of  production 
which  economize  to  the  greatest  extent  possible  the  use 
of  capital  and  skill.  When  such  men  survive,  a 
greater  conformity  to  natural  conditions  being  thus 
prevented,  land  less  productive  of  the  desired  articles 
of  food  must  be  cultivated  as  the  demand  for  food  in- 
creases. The  present  high  price  of  food  and  the  arti- 
ficial pressure  of  population  on  the  means  of  subsist- 
ence are  due  to  this  lack  of  conformity  to  nature,  and 
only  by  a  better  adjustment  to  natural  conditions  can 
we  hope  to  preserve  a  low  price  of  food  and  increase 
the  average  return  for  labor. 


CHAPTER    III. 

THE   LAW   OF   POPULATION. 

An  intelligent  discussion  of  the  doctrine  of  Malthus, 
which  affirms  that  population  tends  naturally  to  in- 
crease faster  than  the  means  of  subsistence,  requires  an 
accurate  understanding  of  the  terms  and  the  method  of 
proof  used  in  this  famous  law.  The  whole  controversy- 
depends  on  the  meaning  of  the  terms  natural  and  means 
of  subsistence,  and  on  the  method  employed  to  estab- 
lish what  is  natural  and  what  are  the  correct  indica- 
tions of  the  exhaustion  of  the  food-supply.  I  have 
already  discussed  the  limits  of  the  increase  of  the  food- 
supply,  and  have  shown  that  there  are  two  very  differ- 
ent limits,  the  ultimate  and  highest  productivity  of  the 
whole  world  and  the  practical  limit  determined  by  the 
amount  of  knowledge  and  capital  possessed  by  man- 
kind. What  the  whole  world  can  produce  and  what 
may  be  obtained  from  the  field  of  employment  which 
the  knowledge  and  capital  of  mankind  allows  them  to 
occupy,  are  clearly  independent  problems,  and  require 
very  different  treatment.  In  his  argument,  Malthus 
overlooks  the  point   of  greatest  importance,  namely, 

the  influence  which  the  means  used  to  increase  subsist- 

72 


THE  LAW  OF  POPULATION.  73 

ence  has  on  the  increase  of  population.  An  increase 
of  food  obtained  without  the  aid  of  man  would  doubt- 
less have  no  effect  on  his  rate  of  increase,  yet  when  the 
co-operation  of  man  is  required  to  increase  subsistence, 
the  changes  brought  about  by  the  new  environments 
required  to  procure  additional  food  might  alter  the 
whole  nature  of  man.  That  population  tends  to  in- 
crease faster  than  the  means  of  subsistence  prepared  for 
it,  does  not  prove  a  tendency  to  increase  faster  than  the 
means  of  subsistence  prepared  by  it.  There  is  a  small 
amount  of  praduce  prepared  for  man,  and  a  large 
amount  that  can  be  prepared  by  him  with  the  aid  of 
knowledge  and  capital.  Beyond  a  doubt  population 
tends  to  increase  rapidly  where  the  field  of  employment 
is  small,  little  or  no  skill  and  capital  being  required, 
but  this  fact  does  not  decide  that  such  an  increase  is 
natural  to  a  society  in  the  very  different  environments 
necessary  to  make  the  whole  earth  its  field  of  employ- 
ment. 

First,  then,  how  are  we  to  know  whether  this  cause 
is  natural  or  not?  The  method  of  proof  used  by 
Malthus  is  well  known ;  to  discover  the  natural 
strenj'th  of  the  tendency  of  population  to  increase,  he 
consid  rs  its  effect  when  comparatively  unimpeded  by 
principles  of  an  opposite  tendency.  He  found  that  in 
new  colonies,  where  the  tendency  has  the  fewest  checks, 
population   frequently   doubled    itself   in   twenty-five 


74      THE  PREMISES  OF  POLITICAL  ECONOMY. 

years,  and  then  concluded  that  this  rate  of  increase 
represented  the  natural  force  of  the  tendency,  and  that 
this  was  the  rate  at  which  population  always  tends  to 
increase.  There  are  many  objections  to  this  method 
of  reasoning  which  will  quickly  appear  when  we  apply 
it  to  the  investigation  of  other  subjects.  Suppose  that 
we  wished  to  determine  the  natural  tendency  of  men 
to  steal.  If  the  Malthusian  method  is  correct,  we 
ought  to  find  a  place  where  the  theft  tendency  is  unre- 
strained by  opposing  principles.  Unfortunately,  we 
should  not  have  to  search  long  to  fiml  places  where 
people  steal  as  naturally  and  constantly  as  new  colo- 
nies increase  in  population.  And  what  conclusion  can 
we  legitimately  draw  from  this  ?  According  to  Mal- 
thus,  we  must  conclude  that  all  men  are  natural 
thieves,  and  that  thieving  would  be  as  common  as  eat- 
ing but  for  the  fear  of  consequences. 

By  the  same  method  of  reasoning  we  could  prove 
that  all  men  are  natural  drunkards,  cannibals,  adul- 
terers, and  murderers,  since  we  find  communities  in 
various  parts  of  the  world  where  drunkenness,  canni- 
balism, etc.,  are  common.  The  method  is  necessarily 
faulty,  as  it  overlooks  the  fact  that  time  and  circum- 
stances ultimately  will  change  our  desires  and  cliarac- 
ters  so  completely  that  we  learn  to  love  a  line  of  con- 
duct which  formerly  would  have  been  most  unpleasant 
to  us,  and  disliking  what  we  formerly  desired,  what  is 


THE  LAW  OF  POPULATION.  75 

natural  of  one  time  and  place  becomes  most  unnatural 
of  another. 

In  every  part  of  economic  investigation  the  term 
natural  is  used  not  to  denote  what  men  would  do  if 
unrestrained  by  any  surrounding  circumstances,  but  to 
denote  what  they  will  do  in  given  external  circum- 
stances if  they  are  allowed  a  free  choice.  Under  some 
circumstances  they  will  naturally  do  one  thing,  and 
under  other  circumstances  other  things.  It  is  not  be- 
cause it  is  natural  that  Americans  buy  cloth  of  Eng- 
land. It  is  natural  to  do  that  by  which  the  greatest 
return  may  be  obtained  for  their  labor,  and  when  they 
can  obtain  their  cloth  with  the  smallest  expenditure  of 
labor  by  exchanging  with  England  Ihey  are  inclined  to 
do  it. 

The  mistake  of  Malthus  is  the  same  as  that  of  E,i- 
cardo  in  the  natural  rate  of  wages.  There  is  always  a 
rate  of  wages  which  will  be  just  sufficient  to  support 
the  laborer  and  bring  up  a  new  generation  to  supply 
their  places,  and  this,  says  Ricardo,  is  the  natural  rate 
of  wages.  More  wages  would  cause  a  too  rapid  in- 
crease of  population,  and  a  fall  of  wages  to  the  natural 
rate ;  while  a  smaller  rate  would  decrease  the  number 
of  laborers  and  thus  cause  a  rise  of  wages.  Why  were 
economists  compelled  to  abandon  this  view  ?  Because 
it  overlooked  the  fact  that  what  is  natural  changes  with 
the  intelligence  and  moral   character  of  the  laborers 


76      THE  PREMISES  OF  POLITICAL   ECONOMY. 

and  with  changes  in  political  and  social  institutions. 
Economists  rightly  say,  we  cannot  affirm  what  the 
laborers  will  naturally  do  unless  we  know  all  about  the 
surrounding  circumstances. 

The  distinction  between  the  lessening  of  the  tendency 
to  overpopulate  and  the  checking  of  this  tendency  can 
be  well  illustrated  by  the  grades  on  a  railroad.  So 
long  as  the  grades  exist  all  hinderances  to  free  move- 
ment of  the  train  are  checks  to  the  tendency  of  the 
train  to  move,  but  any  change  in  the  level  of  the  track 
by  which  the  grade  is  reduced  will  lessen  the  tendency 
of  the  train  to  move  down-grade,  and  the  track  being 
brought  to  a  level,  the  train  will  have  no  tendency  to 
move.  There  are  in  the  present  social  state  many 
causes  influencing  men  to  increase  population,  and 
whatever  counteracts  these  causes  is  a  check  to  its 
increase.  Any  change  in  the  social  state  which  will 
remove  these  causes  lessens  the  tendency  to  over- 
populate,  and  if  they  should  all  be  removed  there 
would  be  no  such  tendency,  and  hence  no  need  of 
checks. 

Malthus  overlooks  completely  those  causes  which 
lessen  the  tendency  to  increase  or  incorrectly  classes 
these  with  moral  restraint.  Our  tastes  and  inclinations 
change  with  alterations  in  our  ideas  or  surroundings, 
and  what  is  natural  in  one  group  of  circumstances  is 
most  unnatural  in  another.     As  an  example  take  the 


THE  LAW   OF  POPULATION.  77 

tendency  to  drink  spirituous  liquor,  which  is  at  present 
ahuost  as  powerful  and  universal  as  the  tendency  to  in- 
crease population.  Where  liquor  is  in  common  use  and 
desired  by  all,  if  any  one,  believing  it  hurtful,  should 
resist  his  inclinations  and  cease  to  drink,  the  effort 
could  be  properly  classed  as  a  moral  ciieck  to  the  ten- 
dency to  drink.  If,  however,  his  children  were  so 
educated  as  to  have  an  aversion  to  its  use,  having  no 
desire  for  stimulants,  moral  restraint  is  no^  needed  to 
keep  them  from  drinking.  Children,  having  no  ten- 
dency to  use  liquor,  need  no  restraint,  while  the  father, 
having  a  tendency,  needs  a  moral  restraint.  The 
changes  in  the  desires  and  appetites  in  the  case  of 
drinking  illustrate  what  is  gradually  being  brought 
about  in  regard  to  overpopulation.  With  the  progress 
of  civilization  circumstances  arise  which  reduce  the 
inclination  to  marry,  and  even  the  power  to  propagate 
the  race,  and  these  altered  surroundings  cannot  be 
classed  either  among  moral  restraints  nor  among  any 
other  kind  of  checks  to  overpopulating,  since  by  them 
the  need  of  any  checks  is  removed. 

It  is  now  often  asserted  that  the  doctrine  of  Maltlius 
has  at  length  been  settled  beyond  controversy  by  the 
discoveries  of  Darwin,  showing  the  tendency  of  man- 
kind to  increase  beyond  the  means  of  subsistence  to  be 
only  a  particular  instance  of  a  general  law  pervading 

all  organic  beings.     There  being  in  all  organic  life  a 

7* 


78      THE  PREMISES  OF  POLITICAL   ECONOMY. 

capacity  to  increase  in  a  geometrical  ratio,  any  species 
of  animal  could  in  a  small  number  of  years  overspread 
every  region  of  the  earth  which  had  a  climate  suitable 
for  its  existence.  Certainly  there  is  a  seeming  unison 
in  these  two  doctrines,  yet  a  closer  examination  will 
reveal  a  lack  of  harmony.  The  view  of  man  which 
Malthus  takes  is  of  that  nature  in  which  all  species  of 
animals  were  in  his  time  regarded.  Man  was  thous-ht 
to  have  a  definite  set  of  attributes,  which  were  unalter- 
able and  unmodified  by  change  in  surrounding  circum- 
stances. The  doctrine  of  Darwin  is  the  very  opposite 
of  this,  the  surrounding  circumstances  determining  all 
the  characteristics  of  animals,  the  latter  changing  with 
the  former.  If  reasoning  on  the  Malthusian  plan, 
Darwin  would  proceed  as  follows :  What  is  the  natural 
rate  of  increase  inherent  in  all  animals?  For  its  dis- 
covery the  race  of  animals  must  be  taken  which  has 
the  most  rapid  rate  of  increase,  this  being  the  race 
where  the  natural  rate  of  increase  is  least  impeded  by 
principles  of  an  opposing  character.  The  natural  rate 
of  this  species  being  determined,  it  is  then  concluded 
that  all  other  animals  would  have  this  rate  but  for  the 
above-mentioned  opposing  principles.  Such  a  method 
is  necessarily  absurd,  there  being  no  natural  rate  of 
increase  inherent  in  all  animals.  Every  species  having 
its  own  rate,  if  we  are  to  consider  them  as  all  having  a 
common  parentage,  then  we  must  also  decide  that  the 


THE  LAW  OF  POPULATION.  79 

rate  of  increase  of  each  animal,  along  with  other  pecu- 
liarities, is  the  result  of  its  environments,  and  that  it 
changes  as  these  are  altered  or  modified.  If  man  is  no 
exception  to  the  general  law  of  animal  life,  his  rate  of 
increase  must  also  be  determined  by  his  surroundings 
and  change  with  them,  and  there  being  no  natural  rate 
for  all  mankind,  each  society  must  be  studied  in  its 
peculiar  environments  if  we  would  discover  the  rate  of 
increase. 

Each  animal  is  adapted  to  certain  climatic  condi- 
tions and  kinds  of  food.  The  climate  being  favorable 
and  the  food  abundant,  the  tendency  to  increase  is 
strong,  and  the  animal  spreads  over  all  the  territory 
suited  to  it  and  provided  with  a  supply  of  the  desired 
food.  Having  reached  its  limit  its  spread  and  increase 
are  stopped,  but  that  does  not  show  that  all  the  means 
of  subsistence  are  exhausted.  Where  is  there  an  ani- 
mal whose  range  is  as  extensive  as  of  the  things  on 
which  it  subsists?  Are  lions  and  tigers  found  every- 
where that  deer  or  other  similar  animals  exist?  Cer- 
tainly not.  Clearly,  then,  the  lack  of  subsistence  can- 
not be  the  cause  why  they  do  not  spread  and  increase. 
The  cause  must  be  sought  in  the  inability  of  the  lion 
or  tiger  to  adapt  themselves  to  the  more  varied  condi- 
tions of  climate  and  the  like.  If  these  animals  had 
more  intelligence  they  doubtless  could  conform  to  the 
circumstances  of  more  extended  regions,  where  their  prey 


80     THE  PREMISES  OF  POLITICAL   ECONOMY. 

is  abundant,  and  in  the  want  of  intelligence  rather  than 
of  subsistence  can  be  seen  the  real  limit  of  their  increase. 
In  this  connection  there  is  yet  a  problem  to  investi- 
gate with  reference  to  the  meaning  of  the  tendency  of 
population  to  increase.  There  is  a  broad  distinction 
between  the  tendency  of  mankind  to  propagate  and  a 
tendency  of  population  to  increase.  The  individuals 
of  a  society  may  have  a  strong  tendency  to  propagate, 
and  yet  the  society  have  no  tendency  to  increase.  There 
is  a  difference  between  the  seed  of  a  plant  and  a  child. 
The  ripe  seed  requires  no  help  or  sustenance  from  the 
plant,  but  provides  for  itself,  while  the  child  does  need 
aid  and  food,  and  without  them  would  perish.  The 
simple  tendency  to  propagate  in  plants,  unaided  and 
unopposed,  would  result  in  an  increase  of  plants,  but 
a  similar  tendency  in  mankind  would  not  increase  pop- 
ulation. For  a  child  to  arrive  at  manhood  parents 
must  feel  some  love  for  children,  and  be  willing  to 
provide  them  with  food  and  other  necessities.  How- 
ever true  it  may  be  that  all  races  have  too  strong  a 
tendency  to  propagate,  it  is  not  true  that  all  races  have 
an  equal  tendency  to  cherish  and  provide  for  their  off- 
spring. So  weak  are  these  tendencies  usually,  that  the 
most  stringent  laws  are  necessary  to  compel  parents  to 
support  and  properly  care  for  their  children.  There 
are  besides  these  other  causes  which  alter  the  tendency 
to  increase  population.     Mankind  is  subject  to  many 


THE  LAW   OF  POPULATION.  81 

diseases   that  cannot   be   prevented.      From   climatic 
and  other  unavoidable  causes  many  die  prematurely, 
and  by  so  much  is  the  tendency  to  increase  lessened. 
For  these  reasons,  to  know  the  tendency  of  population 
to  increase  in  any  place  we  must  know  much  more 
than  what  is  the  natural  tendency  to  propagate.     We 
must  also  ascertain  the  love  of  parents  for  children, 
their  willingness  to  provide  for  them,  and  the  una- 
voidable dangers  from  disease  and  other  circumstances. 
When  we  have  found  out  these  facts  we  can  know  the 
strength  of  the  tendency  to  increase  population,  and  if 
we  further  discover  the  rate  at  which  the  means   of 
subsistence  is  enlarging,  we  can  determine  whether  or 
not  there  is  a  tendency  to  overpopulate.     The  effect  of 
a  tendency  to  overpopulate  is  to  augment  through  war, 
famine,  and   the   increase   of    disease   the   premature 
deaths  to  such  an  extent  as  to  cut  off  the  surplus  pop- 
ulation.    An  examination  of  the  various  races  of  men 
will  make  it  evident  that  the  tendency  to  increase  pop- 
ulation at  the  present  time,  in  most  races  at  least,  is  so 
strong  as  to  be  detrimental,  but  this  gives  us  no  reason 
to  infer,  as  does  Malthus,  that  it  is  natural  and  con- 
stant, and  that  moral  restraint  will  always  be  necessary 
to  keep  it  from  injuring  society. 

There  is,  however,  a  much  greater  objection  to  the 
method  of  investigation   used  by  Malthus  than  the 
misuse  of  the  word  natural.     He  examined  only  what 
/ 


82      THE  PREMISES  OF  POLITICAL  ECONOMY. 

kept  population  down,  and  disregarded  the  causes  which 
led  to  an  increase  of  production.  No  decision  can  be 
reached  on  the  relation  of  population  and  the  means 
of  subsistence  without  an  investigation  both  of  the 
checks  to  population  and  of  the  causes  of  the  increase 
of  food.  When  this  is  done,*  it  will  be  immediately 
perceived  that  Malthus  has  enumerated  among  his 
checks  to  population  the  causes  why  the  food-supply 
increases  at  all.  He  affirms  that  prudence  is  a  check  to 
population.  It  is,  however,  to  the  exercise  of  prudence 
that  all  the  increase  of  food  is  due.  No  civilization  at 
all  is  possible  without  the  use  of  capital,  and  how  is  it 
possible  to  obtain  capital  without  the  use  of  prudence  ? 
AVhy  do  men  save  and  accumulate  capital  if  not  to 
better  their  condition  ?  Yet  IMalthus  classes  this  desire 
to  better  one's  condition  among  checks  to  population. 
It  is,  however,  the  cause  of  all  increase  of  the  food- 
supply,  since  to  it  is  due  all  capital  and  all  increase  of 
skill  and  knowledge.  The  so-called  prudential  checks 
are  really  not  checks  at  all  in  the  sense  that  they  are  a 
restraint  on  population.  They  allow  and  cause  an  in- 
crease of  population,  but  at  the  same  time  they  regu- 
late it  and  make  it  slower  than  it  tends  to  be  where 
they  are  not  in  force.  On  the  other  hand,  the  ten- 
dency to  increase,  unrestrahied  by  prudence,  does  not 
increase  population,  but  decreases  it.  Prudence  is  re- 
quired to  obtain  capital  and  skill,  and  where  these  are 


THE  LAW   OF  POPULATION.  83 

not  population  decreases  instead  of  increases,  on  ac- 
count of  the  limited  field  of  employment  possessed  by- 
societies  who  do  not  save  or  educate. 

Malthus  and  all  his  followers  assume,  without  any 
investigation,  that  the  high  price  of  food  is  caused  by 
natural  and  not  social  obstacles  to  the  increase  of  food, 
and  that  wherever  there  is  a  high  price  of  food  the 
supply  is  so  nearly  exhausted  that  an  unjust  distribu- 
tion of  wealth  does  not  even  aggregate  the  evils  of 
overpopulation,  but  only  causes  them  to  be  somewhat 
earlier  felt  than  otherwise.  There  are  many  reasons 
for  doubting  this  assumption,  and  I  shall  endeavor  to 
show  that  there  is  no  connection  between  a  high  price 
of  food  and  the  exhaustion  of  the  food-supply,  that  a 
high  price  of  food  only  occurs  in  those  societies  where 
the  natural  resources  are  undeveloped  or  wasted,  and 
that  it  is  only  by  so  conforming  to  natural  conditions 
as  to  allow  a  low  price  of  food  that  a  society  can  exist 
with  intelligence  and  capital  sufficient  to  exhaust  the 
food-supply. 

The  only  kind  of  a  society  where  there  is  a  pressure 
of  population  on  the  food-supply  is  in  the  original 
state  where  no  capital  is  used,  and  where  man  only 
consumes  what  he  finds,  doing  nothing  to  increase  his 
means  of  subsistence.  The  amount  of  fruit,  berries, 
eggs,  and  wild  game  is  strictly  limited,  and  population 
must  limit  itself  to  their  amount,  and  if  more  persons 


84      I'HE  PREMISES  OF  POLITICAL   ECONOMY. 

are  born  than  can  be  fed,  they  must  die  of  starvation 
or  disease.  So  long  as  the  Indians  live  on  buffaloes 
there  is  a  ratio  between  their  number  and  that  of  the 
buffaloes.  With  a  given  number  of  buffaloes  only  a 
given  number  of  Indians  can  live,  and  whatever  the 
food  of  people  in  such  a  state  of  society  may  be,  the 
law  is  the  same ;  as  they  do  nothing  to  increase  the 
food,  they  must  limit  themselves  to  their  food  by  pru- 
dence, or  suffer  from  want  and  disease  and  other  posi- 
tive checks  to  population.  This,  however,  is  all 
changed  when  men  discover  that  they  can  increase  the 
food-supply  by  labor  exerted  previous  to  the  time  of  con- 
sumption. The  labor  expended  before  the  produce  is 
needed,  we  call  capital ;  and  so  long  as  the  return  of  labor 
can  be  increased  by  the  use  of  capital  the  relation  is  that 
of  population  to  capital,  and  not  that  of  population  to 
subsistence,  as  it  was  before.  These  very  different 
relations  are  regarded  by  most  economists  as  identical, 
and  economists  pass  over  from  the  conclusions  derived 
from  one  of  these  relations  to  those  of  the  other  as 
if  they  were  the  same.  Only  so  long  as  men  merely 
consume  and  do  not  produce,  can  prudence  act  as  a 
check  to  population,  or  be  rightly  regarded  as  a  check. 
When  men  begin  to  produce  by  means  of  capital,  pru- 
dence is  no  longer  a  check  to  population.  It  is  the 
cause  of  its  increase,  since  all  capital  is  the  result  of 
the   exercise   of  prudence,  deferring   consumption  in 


THE  LAW  OF  POPULATION.  35 

order  to  enjoy  increased  consumption  at  some  future 
time.  In  such  a  society  there  is  on  one  hand  the  desire 
of  immediate  consumption,  and  on  the  other  the  desire 
for  the  increased  consumption  which  can  be  obtained 
by  deferred  consumption,  and  on  the  comparative  value 
of  the  present  and  the  future  depends  the  amount  of 
population  which  can  be  supported.  Whatever  in- 
creases the  regard  for  future  welfare  allows  an  increase 
of  population,  and  whatever  augments  the  desire  for 
immediate  consumption  checks  the  increase  of  popula- 
tion. 

Here,  then,  we  have  a  very  different  view  from 
that  presented  by  Malthus.  His  prudential  checks  no 
longer  operate  as  they  did  on  the  original  society 
merely  to  check  population.  They  now  are  the  cause 
of  its  increase  in  opposition  to  the  positive  checks 
which  render  the  future  uncertain,  and  hence  increase 
the  desire  for  immediate  consumption,  and  thus  check 
the  growth  of  population.  As  the  desire  for  future 
consumption  and  the  amount  of  capital  increases,  more 
land  is  cultivated,  and  a  larger  population  can  be  sup- 
ported, while  the  increase  of  population  is  checked  by 
any  increase  of  the  desire  of  immediate  consumption. 
Such  a  society  is  divided  into  two  classes, — capitalists, 
who  prefer  an  increased  but  deferred  consumption,  and 
the  laborers,  who  choose  immediate  consumption. 
When  labor  tends  to  increase  faster  than  capital  the 


86      THE  PREMISES   OF  POLITICAL   ECONOMY. 

rate  of  wages  falls,  and  coutinues  to  fall,  until  the 
too  rapid  rate  of  increase  of  population  is  checked  by 
the  diminishing  returns  obtained  for  labor.  In  the 
rate  of  wages  we  have  a  criterion  by  which  to  deter- 
mine the  force  of  the  tendency  to  overpopulate,  for 
where  wages  are  low  the  tendency  is  strong.  The 
tendency  to  overpopulate,  not  overpopulation,  is  the 
cause  of  low  wages.  Where  this  tendency  is  strong  and 
wages  are  low,  labor  being  inefficient  and  unskilled, 
less  is  produced  than  if  the  tendency  to  overpopulate 
were  weaker,  and  less  being  produced,  and  the  produce 
less  skilfully  and  more  wastefully  used,  a  smaller  pop- 
ulation can  be  supported  than  where  the  tendency  to 
overpopulate  being  weaker,  wages  are  high  enough  to 
enable  the  laborers  to  become  intelligent  and  skilful. 

I  wish  to  emphasize  the  contradictions  in  which 
writers  become  involved  when  they  confound  two 
problems  so  essentially  different.  Mankind  suffers 
from  a  want  either  of  capital  or  food,  one  or  the  other, 
but  not  from  want  of  both.  The  want  of  capital  arises 
from  social  causes,  the  want  of  food  from  physical  ones. 
In  the  latter  case  it  is  the  niggardliness  of  nature  which 
causes  their  suffering,  in  the  former  it  is  social  and  not 
natural  causes  which  have  prevented  the  increase  of 
food  and  caused  its  high  price.  If  the  doctrine  is  cor- 
rect that  more  capital  will  always  employ  additional 
labor,  then  it  is  not  true  that  we  are  now  pressing 


I 
THE  LAW  OF  POPULATION.  87 

against  the  means  of  subsiateuce.     By  far  the  greater 
part  of  the  world  is  yet  open  for  the  employment  of 
capital,  if  it  were  obtainable.    Besides,  there  never  was 
a  time  in  the  world's  history  when  the  population  was 
as  well  supplied  with  food  and  at  so  little  outlay  of 
labor  as  at  the  present  time.     By  this,  however,  is  not 
meant  that  the  price  of  food  is  lower,  for  this  is  not 
true,  but  that  a  smaller  proportion  of  the  population  is 
ensaued  in  agriculture  than  ever  before :  and  this,  not 
the  price  of  food,  is  the  true  test.     On  the  other  hand, 
the  lack  of  capital  is  to  be  seen  on  every  side.     Tlie 
rate  of  interest  is  not  the  proper  criterion  of  the  plen- 
tifulness  of  capital.    A  low  rate  of  interest  only  means 
that  capital  can  be  obtained  at  a  low  rate  by  those  who 
can  give  good  security ;  the  mass  of  mankind  cannot 
give  this  security,  their  desire  for  immediate  enjoy- 
ment being  so  strong  that  they  will  neither  save  for 
themselves  nor  prudently  invest  capital  which  others 
would  willingly  place  in  their  hands  if  capitalists  were 
sure  that  they  would  use  it  properly. 

The  societies  in  which  the  price  of  food  is  high  are 
those  in  which  the  people  are  divided  into  separate 
classes,  capitalists  and  laborers.  Tiie  laborers  not  being 
under  the  necessity  of  exercising  prudence,  increase 
rapidly,  while  the  rapid  increase  of  capital  lowers 
the  rate  of  interest;  and  the  result  of  these  two  in- 
fluences is  a  rise  in  the  price  of  food  and  a  fall  in  the 


88      y^^  PREMISES   OF  POLITICAL   ECONOMY. 

value  of  other  commodities, — changes  which  transfer 
the  greater  part  of  tlie  revenues  of  the  country  to  the 
landlords.  In  such  a  country  only  cheap  labor  and 
capitalists  willing  to  save  at  a  low  rate  of  interest  can 
survive,  for  such  a  combination  can  force  the  price  of 
food  so  high,  and  the  price  of  other  commodities  so 
low,  as  to  displace  the  other  and  better  classes,  who  can- 
not offer  to  landlords  such  favorable  terms.  Here  we 
have  a  high  price  of  food,  and  at  the  same  time  an 
ignorant  and  inefficient  population  tending  to  increase 
too  rapidly.  This  only  shows  that  there  are  social 
causes  which  allow  the  ignorant  part  of  the  population 
to  survive.  Hence  the  seemingly  universal  proposition 
of  Malthus  is  really  but  a  particular  one,  no  account 
beins:  taken  of  the  rate  of  increase  of  the  classes  which 
the  social  arrangement  permits  to  be  displaced  by  their 
inferiors.  The  high  price  of  food  in  such  a  society 
comes  from  a  limit  to  the  field  of  employment  open  to 
surviving  combinations  of  cheap  labor  and  low  interest. 
This  furnishes  no  indication  of  an  exhaustion  of  the 
food-supply.  The  prevailing  prejudice  and  ignorance 
cause  the  available  resources  to  be  but  partially  used,  and 
prevent  whole  countries  from  being  inhabited  at  all. 

The  preceding  arguments  show  that  the  high  price 
of  food  is  not  the  result  of  natural  laws,  but  of  igno- 
rance, prejudice,  and  an  unequal  distribution  of  wealth. 
To  this  Prof.  Cairnes  objects  thus : 


TEE  LAW  OF  POPULATION.  89 

"  It  matters  not  whether  the  obstacles  be  physical  or 
natural,  whether  absolute  and  insuperable,  or  the  result 
simply  of  prejudice  and  ignorance,  so  long  as  they  are 
effectual  in  preventing  the  cultivation  of  the  countries 
in  question.  So  long  as  this  is  the  case  these  countries, 
to  all  practical  intents  and  purposes,  may  be  said  not  to 
exist  for  us.  They  can  no  more  be  counted  on  as 
means  of  supporting  a  population  than  the  countries  in 
the  moon." 

What  Prof.  Cairnes  shows  is  that  uncultivated  coun- 
tries and  other  unused  resources  are  of  no  practical 
account  so  long  as  the  ignorance  and  prejudice  remain, 
but  that  is  not  what  he  and  other  Malthusians  set  out 
to  prove.  Their  original  proposition  is  that  population 
naturally  tends  to  increase  faster  than  subsistence,  while 
what  they  make  out  is  that  population  increases  too 
rapidly  where  ignorance  and  prejudice  cause  an  ill  dis- 
tribution of  wealth.  The  best  way  to  show  the  weak- 
ness of  Prof.  Cairnes's  argument  is  to  apply  his  reason- 
ing another  way.  Besides  food  men  need  water,  both 
to  drink  and  for  cleanliness,  and  just  as  valid  a  ratio 
can  be  shown  between  the  increase  of  population  and 
the  supply  of  water  as  between  population  and  the 
supi)ly  of  food.  Population  increases  according  to  a 
geometrical  ratio,  while  the  supply  of  water  at  best 
only  increases  in  an  arithmetical  ratio,  and  the  effect  of 

brins^ino;  together  the  two  different  rates  of  increase 

8* 


90      THE  PREMISES  OF  POLITICAL  ECONOMY. 

will  be  just  as  striking  as  the  contrasting  of  the  in- 
crease of  population  and  that  of  subsistence.  So  we 
must  conclude  that  population  naturally  increases  faster 
than  the  water-supply,  and  that  the  amount  of  popu- 
lation is  always  proportional  to  the  supply  of  water. 
Certainly  the  lack  of  cleanliness  has  caused  many  times 
more  deaths  than  the  lack  of  food  ever  caused,  and  the 
fact  that  men  die  from  lack  of  cleanliness  shows  that  the 
supply  of  water  has  been  exhausted.  It  is,  however, 
objected  that  the  brooks  and  rivers  are  full  of  water, 
which  could  have  been  used  but  for  the  ignorance  of  the 
people  and  their  prejudice  against  cleanliness,  and  that 
many  times  the  present  population  might  be  supplied 
with  water  if  they  would  go  to  the  brooks  and  rivers 
to  get  it.  To  this  Prof.  Cairnes,  if  consistent,  would  re- 
ply, that  it  matters  not  whether  the  obstacles  are  physi- 
cal or  moral,  or  the  result  simply  of  prejudice  and  igno- 
rance, so  long  as  they  are  effectual  in  preventing  the 
bringing  and  using  of  the  water;  and  that  so  long  as 
this  is  the  case  these  brooks  and  rivers,  to  all  practical 
purposes,  may  be  said  not  to  exist  for  us. 

The  argument  that  the  increase  of  population  is 
checked  from  want  of  water  is  certainly  as  well- 
founded  as  the  argument  that  population  is  checked 
from  want  of  food,  and  any  argument  ever  brought 
forward  to  prove  one  position  can  be  equally  well  ap- 
plied to  prove  the  other.     All  that  can  rightly  be  in- 


THE  LAW  OF  POPULATION.  91 

ferred  from  either  proposition  is  that  so  long  as  igno- 
rance and  prejudice  have  their  present  force,  the  whole 
sujiply  of  either  food  or  water  cannot  be  utilized,  great 
suffering  is  produced,  and  population  remains  much 
less  than  it  would  otherwise  be.  Outside  of  this  ques- 
tion of  what  people  will  do  when  swayed  by  ignorance 
and  prejudice,  there  is  a  problem  of  great  importance. 
What  are  the  real  limitations  of  the  increase  of  food 
and  water?  To  the  solution  of  this  problem  neither 
Malthus  nor  any  of  his  followers  has  made  any  im- 
portant contribution.  From  all  their  arguments  it 
could  not  be  inferred  whether  the  real  limits  of  the 
increase  of  mankind  will  be  a  want  of  water  or  of 
food,  for  their  conclusions  merely  show  that  there  must 
be  a  limit  to  population,  and  not  what  that  limit  is. 

The  mistake  of  Malthus  was  that  he  investigated 
only  the  rate  of  possible  increase  inherent  in  those 
classes  who  do  nothing  to  increase  the  food-supply,  and 
neo-lected  to  examine  the  influence  on  the  increase  of 
population  of  those  conditions  by  which  the  food- 
supply  is  increased.  To  these  conditions  men  must 
conform  if  population  is  to  increase,  and  the  question 
of  importance  is  what  men  naturally  do  who  comply 
with  the  conditions  necessary  to  increase  the  food- 
supply,  and  not  what  men  will  do  who  will  not  adapt 
themselves  to  the  environments  necessary  to  a  high 
civilization.     The  latter  class  must  pass  away  if  civili- 


92      THE  PREMISES   OF  POLITICAL   ECONOMY. 

zation  progresses,  and  their  places  be  supplied  by  others 
who  better  conform  to  natural  conditions.  Only  those 
can  remain  who  appreciate  the  future  enough  to  accu- 
mulate capital,  and  will  use  the  food  which  nature  sup- 
plies most  abundantly,  and  who  will  consume  food  only 
as  a  means  to  preserve  health,  and  take  their  pleasures 
in  such  a  manner  as  is  most  conformable  to  the  general 
good.  It  is  only  by  such  as  these  that  the  world  can 
be  fully  populated ;  and  so  long  as  men  do  not  show 
these  characteristics  the  population  of  the  world  must 
remain  small  in  proportion  to  what  it  might  otherwise 
be,  and  the  distribution  of  wealth  will  be  so  unfavor- 
able as  to  cause  a  low  rate  of  wages  and  a  high  price 
of  food. 

Only  as  the  development  of  the  qualities  in  men 
opens  up  to  them  new  sources  of  pleasure  will  they 
adjust  themselves  better  to  nature  and  increase  the 
food-supply.  So  long  as  the  appetites  and  passions  of 
men  have  their  original  force,  those  means  of  enjoyment 
which  aiFord  an  immediate  pleasure  will  be  preferred 
to  those  that  augment  the  pleasures  of  the  future  rather 
than  those  of  the  present.  The  original  man  takes  his 
pleasure  to-day,  putting  off  his  burdens  and  pains  until 
to-morrow.  On  the  other  hand,  he  who  conforms  to 
nature  takes  up  his  burdens  to-day  and  enjoys  a  much 
greater  stock  of  pleasures  on  the  morrow.  He  produces 
before  he  consumes,  while  his  ancestor  consumed  before 


THE  LAW  OF  POPULATION.  93 

he  produced.  The  supply  of  food  can  be  increased  only 
as  men  learn  to  place  the  pain  before  the  pleasure,  and 
those  qualities  which  must  become  active  in  men  before 
they  will  place  production  ahead  of  consumption  will 
also  cause  them  to  prefer  pleasures  having  no  painful 
reaction  to  those  like  the  pleasures  tending  to  increase 
of  population,  which  have  so  many  undesirable  con- 
sequences. The  conditions  allowing  the  increase  of 
food  can  be  complied  with  only  as  production  is  placed 
further  and  further  ahead  of  consumption.  This  will 
be  done  only  as  the  qualities  leading  men  to  prefer  de- 
ferred to  immediate  pleasures  gradually  become  more 
developed,  and  as  they  develop  the  original  appetites 
and  passions  become  weaker. 

We  can  thus  determine  beforehand  in  what  manner 
the  very  nature  of  man  must  be  altered  to  utilize  all 
of  the  productive  forces  of  nature.  Those  habits  and 
customs  which  limit  the  food-supply  must  be  broken 
down,  those  appetites  and  passions  which  cause  men  to 
prefer  immediate  to  deferred  pleasures  must  be  weak- 
ened or  lost,  and  the  desire  of  exclusive  pleasures  must 
be  displaced  by  a  love  of  those  pleasures  whose  enjoy- 
ment does  not  exclude  the  mutual  enjoyment  of  others. 
Just  as  the  course  of  a  river  is  fixed  by  the  slope  of  the 
land  through  which  it  flows,  so  the  natural  conditions 
which  surround  man  determine  what  changes  in  his 
pleasures  must  be  made  and  what  qualities  in  him  must 


94      THE  PREMISES   OF  POLITICAL  ECONOMY. 

be  developed  before  an  increased  quantity  of  food  can 
be  obtained  for  a  growing  population.  The  tendency 
to  overpopulate  must  be  reduced  to  comply  with  the 
conditions  for  enlarging  the  means  of  subsistence,  and 
there  is  no  reason  to  believe  that  the  rate  of  increase  of 
those  who  conform  to  the  natural  conditions  by  which 
they  are  surrounded  will  be  greater  than  their  means 
to  increase  the  food-supply. 


CHAPTER    lY. 

THE   RELATION   OF   EENT  TO  WAGES. 

The  produce  of  a  country  is  divided  into  three 
parts,  rent,  profits,  and  wages;  these  being  the  terras 
used  to  denote  the  reward  received  by  the  landlords, 
capitalists,  and  laborers  for  the  assistance  rendered  by 
each  to  production.  If  this  be  correct,  to  know  what 
the  share  of  any  one  factor  is,  it  would  seem  necessary 
to  know  what  the  shares  of  both  the  other  factors  are. 
To  know  what  the  amount  of  wages  is,  it  must  be 
known  wliat  is  the  amount  of  both  rent  and  profits, 
or  to  determine  what  profits  are,  we  must  know  the 
amount  of  rent  and  wages.  The  current  theory  of 
wages  and  profits  does  not  recognize  this  relation,  but 
proceeds  to  determine  wages  and  profits  without  any 
reference  to  rent.  Wages,  we  are  told,  depend  upon 
profits,  rising  as  profits  fall,  and  falling  as  profits  rise. 
John  Stuart  Mill,  in  his  discussion  of  profits,  puts  the 
case  as  follows : 

"It  thus  appears  that  the  two  elements  on  which, 

and  which  alone,  the  gains  of  capitalists  depend,  are, 

95 


96      THE  PREMISES   OF  POLITICAL  ECONOMY. 

first,  the  magnitude  of  the  produce;  in  other  words, 
the  productive  power  of  labor ;  and,  secondly,  the  pro- 
portion of  that  produce  obtained  by  the  laborers  them- 
selves; the  ratio  which  the  remuneration  of  the  la- 
borers bears  to  the  amount  they  produce.  These  two 
things  form  the  data  for  determining  the  gross  amount 
divided  as  profit  among  all  the  capitalists  of  the  coun- 
try; but  the  rate  of  profit,  the  percentage  on  the 
capital,  depends  only  on  the  second  of  the  two  ele- 
ments, the  laborer's  proportional  share,  and  not  on  the 
amount  to  be  shared.  If  the  produce  of  labor  were 
doubled,  and  the  laborers  obtained  the  same  propor- 
tional share  as  before, — that  is,  if  their  remuneration 
was  also  doubled, — the  capitalists,  it  is  true,  would  gain 
twice  as  much  ;  but  as  they  would  have  had  to  ad- 
vance twice  as  much,  the  rate  of  their  profit  would  be 
only  the  same  as  before." 

If  whatever  of  the  ultimate  produce  of  industry  is 
not  profit  is  wages,  from  what  source  do  the  landlords 
receive  their  share  ?  Certainly  from  some  source  they 
obtain  a  large  revenue,  and  where  could  they  get  it  if 
all  the  produce  of  labor  goes  to  increase  wages  and 
profits  ?  The  importance  of  this  question  is  not  over- 
looked by  Mill,  but  he  claims  that  no  practical  error  is 
produced  by  disregarding  rent,  and  promises  to  show 
this  in  a  subsequent  chapter  on  rent  to  which  he  refers. 
To  this  explanation  I  wish  to  call  especial  attention, 


THE  RELATION  OF  RENT  TO    WAGES.         97 

because  the  correctness  of  Mill's  position  is  of  the 
greatest  importance  both  in  the  discussion  of  wages 
and  also  of  free-trade. 

As  is  well  known,  these  subjects  were  elucidated  by- 
Adam  Smith  before  the  law  of  rent  was  known.  All 
his  demonstrations  rest  on  the  supposition  that  produce 
is  divided  into  two  shares  only,  wages  and  profits,  what- 
ever is  not  resolvable  into  one  of  these  elements  being 
resolvable  into  the  other.  When  the  law  of  rent  was 
discovered  by  Ricardo,  it  being  evident  that  produce 
was  divided  into  three  shares  instead  of  two,  the 
greater  part  of  Political  Economy  was  worked  over 
and  rent  put  in  its  proper  place.  This,  however,  was 
not  done  in  the  discussion  of  wages  or  of  free-trade. 
These  subjects  still  continue  to  be  discussed  as  though 
there  were  only  two  factors  among  whom  the  produce 
of  industry  is  to  be  divided,  and  rent  is  either  ignored 
or  eliminated  from  the  discussion.  The  latter  is  the 
method  employed  by  Mill,  and  if  the  reasoning  by  ' 
which  he  accomplishes  this  is  unsubstantial,  all .  his 
discussion  of  wages,  as  well  as  free-trade,  is  defective. 
The  element  of  rent  must  be  introduced  and  the  course 
of  reasoning  modified  to  meet  the  altered  conditioilS^ 
before  correct  results  can  be  obtained. 

I  quote  in  full  Mill's  explanation,  given  at  the  close 
of  his  chapter  on  rent,  of  the  reason  that  no  practical 
error  arises  in  disregarding  rent  and  supposing  that  all 


98      THE  PREMISES  OF  POLITICAL   ECONOMY. 

the  advances  of  tlie  capitalists  consist  in  the  wages  of 
the  laborers. 

"  After  this  view  of  the  nature  and  causes  of  rent, 
let  us  turn  back  to  the  subject  of  profits,  and  bring  up 
for  reconsideration  one  of  the  propositions  laid  down 
in  the  last  chapter.  We  there  stated  that  the  advances 
of  the  capitalist,  or  in  other  words,  the  expenses  of  pro- 
duction, consist  solely  in  wages  of  labor,  that  whatever 
portion  of  the  outlay  is  not  wages  is  previous  profit, 
and  whatever  is  not  previous  profit  is  wages.  Rent, 
however,  being  an  element  which  it  is  impossible  to 
resolve  into  either  wages  or  profit,  we  were  obliged  for 
the  moment  to  assume  that  the  capitalist  is  not  required 
to  pay  rent, — to  give  an  equivalent  for  the  use  of  an 
appropriated  natural  agent, — and  I  undertook  to  show 
in  the  proper  place  that  tiiis  is  an  allowable  supposi- 
tion, and  that  rent  does  not  really  form  any  part  of 
the  expenses  of  production,  or  of  the  advances  of  the 
capitalist.  The  grounds  on  which  this  assertion  were 
made  are  now  apparent.  It  is  true  that  all  tenant 
farmers  and  many  other  classes  of  producers  pay  rent. 
But  we  have  now  seen  that  whoever  cultivates  land 
paying  a  rent  for  it,  gets  in  return  for  his  rent  an  in- 
strument of  superior  power  to  other  instruments  of  the 
same  kind  for  which  no  rent  is  paid.  The  superiority 
of  the  instrument  is  in  exact  proportion  to  the  rent 
paid  for  it.      If  a  few  persons  had  steam-engines  of 


THE  RELATION   OF  RENT  TO    WAGES.         99 

superior  power  to  all  others  in  existence,  but  limited 
by  physical  laws  to  a  number  short  of  the  demand,  the 
rent  which  a  manufacturer  would  be  willing  to  pay  for 
one  of  these  steam-engines  could  not  be  looked  upon 
as  an  addition  to  his  outlay,  because  by  the  use  of  it 
he  would  save  in  ids  other  expenses  the  equivalent  of 
what  it  cost  him  ;  without  it  he  could  not  do  the  same 
quantity  of  work  unless  at  an  additional  expense  equal 
to  the  rent.  The  same  thing  is  true  of  land.  The 
real  expenses  of  production  are  those  incurred  on  the 
worst  land,  or  by  the  capital  employed  in  the  least 
favorable  circumstances.  This  laud  or  capital  pays,  as 
we  have  seen,  no  rent,  but  the  expenses  to  which  it  is 
subject  cause  all  other  land  or  agricultural  capital  to  be 
subjected  to  an  equivalent  expense  in  the  form  of  rent. 
Whoever  does  pay  rent  gets  back  its  full  value  in 
extra  advantages,  and  the  rent  which  he  pays  does  not 
place  him  in  a  worse  position  than,  but  only  in  the 
same  position  as,  his  fellow-producer  who  pays  no  rent, 
but  whose  instrument  is  one  of  inferior  efficiency." 

Notice  the  difference  between  what  Mill  starts  out  to 
prove  and  what  he  finally  succeeds  in  showing :  "  The 
advances  of  the  capitalist  consist  solely  in  wages  of 
labor,  and  whatever  portion  of  the  outlay  is  not  wages 
is  previous  profit."  This  is  what  he  was  to  show,  but 
the  proposition  which  he  does  prove  is  very  diSerent 
from  this :  "  Whoever  does  pay  rent  gets  back  its  full 


100  THE  PREMISES   OF  POLITICAL  ECONOMY. 

value  iu  extra  advantages,  and  the  rent  which  he  has 
to  pay  does  not  place  hun  in  a  worse  position  than,  but 
only  in  the  same  position  as,  his  fellow-producer  who 
pays  no  rent." 

What  Mill  succeeds  in  proving  is  merely  that  it 
makes  no  difference  to  the  capitalist  whether  he  pays 
rent  or  wages.  "Whether  wages  go  down  and  rent  goes 
up,  or  wages  rise  and  rent  falls,  is  all  the  same  to  the 
capitalist.  His  profits  and  advances  are  not  affected 
by  a  change  which  causes  the  shares  of  one  factor  to 
be  diminished  if  at  the  same  time  the  other  propor- 
tionally increases. 

A  few  examples  will  illustrate  clearly  the  insufficiency 
of  Mill's  argument.  Let  us  suppose  two  sections  of 
a  country  having  an  equal  amount  of  agricultural 
produce,  and  in  one  of  them  the  land  is  of  unequal 
fertility,  the  rent  being  equal  to  one-quarter  of  the 
produce,  while  in  the  other  all  the  land  has  the  same 
fertility  of  the  poorest  land  in  the  first  section,  and 
hence  no  rent  is  paid.  In  this  case  the  advances  of  the 
capitalists  in  the  first  section  would  be  three-quarters 
to  the  laborers  and  one-quarter  to  the  landlords,  while 
in  the  second  all  the  advances  would  go  to  the  laborers. 
The  amount  advanced  in  each  case  would  be  the  same, 
as  the  amount  of  the  produce  is  the  same.  The  recip- 
ients, however,  are  different,  and  for  each  seventy- five 
laborers   employed  in   the   first  section   one   hundred 


THE  RELATION  OF  RENT  TO    WAGES.       IQl 

laborers  would  be  employed  in  the  second.  Mill  is 
right  in  saying  that  it  is  all  the  same  to  the  capitalist 
whether  he  hires  seventy-five  laborers  and  pays  an 
amount  equal  to  the  wages  of  twenty-five  laborers  to 
landlords  or  employs  one  hundred  laborers  and  pays  no 
rent.  Yet  this  does  not  show  that  all  the  advances  of 
the  capitalist  in  the  first  case  consist  in  wages  of  the 
laborers.  The  landlord  coming  in  the  place  of  twenty- 
five  laborers  gets  their  wages,  and  the  result  to  the 
capitalist  is  just  the  same  as  if  these  laborers  had  been 
employed  and  no  rent  paid.  The  landlord  is  a  nomi- 
nal laborer,  who,  doing  no  work,  receives  his  share  of 
the  produce  along  with  the  real  laborers  who  do  the 
work.  Of  course  it  is  the  amount  of  the  advances,  and 
not  who  gets  them,  that  interests  the  capitalist;  but 
Mill  promised  to  prove  an  entirely  different  proposi- 
tion, namely,  that  all  the  advances  of  the  capitalists 
went  to  the  laborers.  This  proposition,  which  is  neces- 
sary to  maintain  his  position  on  the  wages  question,  he 
did  not  prove ;  he  merely  stated  it  and  then  passed  to 
the  discussion  of  another  point. 

The  error  involved  in  disregarding  rent  becomes  evi- 
dent when  we  consider  the  nature  of  the  doctrine  estab- 
lished by  disregarding  it.  Mill  wishes  to  establish  the 
fact  that  wages  fall  as  profits  rise,  and  rise  as  profits 
fall.     By  these  terms  are  meant  not  the  absolute,  but 

the  proportional  share  received  by  each.     The  rate  of 

9* 


102  I'SE  PREMISES   OF  POLITICAL   ECONOMY. 

profit,  we  are  told,  depends  upon  the  laborer's  propor- 
tional share,  and  not  on  the  amount  to  be  shared.  A 
proportional  share  of  the  produce  certainly  goes  to  rent 
even  if  no  rent  is  paid  on  some  part  of  the  produce. 
If  thirty  per  cent,  of  one-fourth  of  the  produce  is  rent, 
twenty  per  cent,  of  the  second  fourth,  ten  per  cent,  of 
the  third,  and  none  of  the  fourth,  then  fifteen  per  cent, 
of  the  whole  produce  is  rent,  just  as  much  as  if  fifteen 
per  cent,  of  every  part  of  the  produce  is  rent.  The 
advances  of  the  capitalists  would  be  the  same  in  one 
instance  as  in  the  other,  and  hence  it  is  evident  that 
the  rate  of  profit  cannot  be  determined  by  knowing  the 
proportional  share  of  the  laborer  alone,  but  only  when 
the  proportional  shares  of  both  laborers  and  landlords 
are  known. 

There  is  still  another  method  of  showing  that  Mill's 
position  is  incorrect.  He  asserts  that  if  the  produce 
of  industry  were  doubled  and  the  laborers  obtained  the 
same  proportional  share  as  before,  the  rate  of  profit 
would  also  remain  the  same,  not  being  increased  at  all. 
Let  us  suppose  that,  the  land  of  two  grades  being  culti- 
vated, each  grade  producing  a  half  of  the  food-supply, 
there  was  difference  enough  in  their  productivity  to 
give  ten  per  cent,  of  the  whole  produce  of  industry 
to  the  owners  of  the  better  land  as  rent,  and  that  of 
the  remaining  produce  the  laborers  received  seventy 
per  cent.,  leaving  twenty  per  cent,  as  profit.     If  the 


THE  RELATION  OF  RENT   TO    WAGES.       103 

produce  of  industry  were  doubled  the  better  grade  of 
land  would  now  produce  enough  to  supply  the  whole 
demand  for  food,  and  rents  would  fall  to  zero.  The 
laborers  receiving  the  same  proportional  share  as  be- 
fore (seventy  per  cent.),  profits  would  be  raised  from 
twenty  to  thirty  per  cent.  I  have  taken  this  simple 
case  to  make  the  falsity  of  INIill's  argument  more 
evident,  yet  the  same  result  would  follow  in  more 
complex  cases.  To  be  sure,  if  the  produce  of  land 
were  doubled  all  rent  would  not  disappear,  still  no 
one  can  doubt  that  such  an  increase  of  produce  would 
reduce  rent.  Even  if  it  were  not  reduced  in  amount, 
its  proportional  share  would  be  less,  since  if  ten  per 
cent,  were  rent  before  the  doubling  of  the  produce,  the 
landlords  receiving  none  of  the  additional  produce,  rent 
would  now  be  but  five  per  cent,  of  the  whole  return 
for  labor,  and,  the  laborers  receiving  seventy  per  cent, 
as  before,  profits  would  be  raised  to  twenty-five  per 
cent.,  a  gain  of  five  per  cent. 

In  his  chapter  on  ultimate  analysis  of  the  cost  of 
production.  Mill  again  endeavors  to  prove  the  de- 
pendence of  wages  on  profits  by  showing  that  the 
value  of  any  commodity  is  determined  not  by  wages, 
but  solely  by  the  quantity  of  labor  which  it  costs  to 
produce  that  commodity  and  bring  it  to  market. 

"The  value  of  one  thing,"  he  says,  "must  always 
be   understood   relatively  to  some  other  thing,  or  to 


104  THE  PREMISES  OF  POLITICAL   ECONOMY. 

things  in  general.  Now,  the  relation  of  one  thing  to 
another  cannot  be  altered  by  any  cause  which  affects 
them  both  alike.  A  rise  or  fall  of  general  wages  is  a 
fact  which  affects  all  commodities  in  the  same  manner, 
and  therefore  affords  no  reason  why  they  should  ex- 
change for  each  other  in  one  rather  than  in  another 
proportion.  To  suppose  that  high  wages  make  high 
values  is  to  suppose  that  there  can  be  no  such  thing  as 
general  high  values.  But  this  is  a  contradiction  in 
terms,  the  high  value  of  some  things  is  synonymous 
with  the  low  value  of  others." 

The  fallacy  in  this  argument  arises  from  the  use  of 
the  term  commodity  with  two  meanings.  With  one 
meaning  it  denotes  everything  bought  or  sold,  while 
with  the  other  its  use  is  restricted  to  those  articles  capa- 
ble of  indefinite  increase,  whose  values  are  determined 
by  the  quantity  of  labor  necessary  to  produce  them. 
If  all  commodities  could  be  made  in  any  quantity  de- 
sired without  an  increase  of  cost,  a  rise  of  wages  affect- 
ing all  commodities  alike  could  not  influence  values. 
There  are,  however,  many  commodities,  of  which  the 
articles  of  food  are  the  most  important,  whose  values 
are  not  determined  by  the  quantity  of  labor  necessary 
to  produce  them.  If  one-third  of  the  labor  of  a  coun- 
try is  devoted  to  agriculture  and  two-thirds  to  other 
commodities,  one-half  of  these  commodities  will  not 
usually  have  as  great  a  value  as  the  agricultural  pro- 


THE  RELATION  OF  RENT   TO    WAGES.       105 

duce,  yet  they  are  the  produce  of  an  equal  amount  of 
labor.  Indeed,  it  might  easily  happen  that  the  value 
of  the  agricultural  produce  might  exceed  the  whole 
value  of  all  the  other  labor. 

There  being  two  classes  of  commodities,  the  value 
of  one  depending,  the  value  of  the  other  not  depending, 
on  the  quantity  of  labor  required  to  produce  them,  the 
value  of  one  class  can  increase  at  the  expense  of  the 
other.  Such  a  change  not  affecting  all  commodities  in 
a  like  manner,  a  rise  in  the  rate  of  wages  would  in- 
crease the  value  of  those  commodities  whose  cost  de- 
pends on  the  quantity  of  labor  necessary  to  produce 
them,  and  decrease  the  value  of  the  other  class  of  com- 
modities, composed  of  food  and  the  like.  It  is  easy  to 
illustrate  how  these  changes  are  brought  about.  There 
being  no  rent  in  a  new  colony,  when  the  best  land  only 
is  cultivated,  all  commodities,  including  food,  will  ex- 
change in  proportion  to  the  labor  needed  to  produce 
them.  When,  however,  the  increased  demand  for  food 
requires  the  cultivation  of  inferior  land,  the  agricultu- 
ral produce  will  not  exchange  with  other  commodities 
in  the  same  ratio  as  before.  A  bushel  of  wheat  will 
exchange  for  more  cloth,  cutlery,  or  other  like  articles 
than  when  no  rent  was  paid.  As  rent  is  raised  through 
the  resort  to  inferior  lands  to  supply  the  increasing  de- 
mand for  food,  a  bushel  of  wheat  will  gradually  ex- 
change for  more  and  more  cloth,  and  the  greater  the 


106   THE  PREMISES   OF  POLITICAL   ECONOMY. 

value  of  the  wheat  the  less  will  be  the  value  of  the 
cloth  aud  other  commodities  whose  values  depend 
solely  on  the  quantity  of  labor  needed  for  their  pro- 
duction. On  the  value  of  these  latter  commodities 
depends  the  rate  of  wages,  and  it  will  fall  as  the  value 
of  agricultural  produce  rises  and  rent  absorbs  a  greater 
part  of  the  whole  produce  of  industry.  Supposing  one 
hundred  yards  of  cloth  to  be  the  result  of  one  week's 
labor,  and  the  same  work  to  be  necessary  to  produce  ten 
bushels  of  wheat  on  the  best  land,  so  long  as  no  rent 
is  paid  they  will  have  an  equal  value,  and  a  week's 
wages  will  be  equal  in  value  to  ten  bushels  of  wheat. 
When  inferior  land  is  brought  into  cultivation,  pro- 
ducing but  nine  bushels  of  wheat  for  the  same  labor 
that  will  give  a  return  of  ten  bushels  on  the  best  land, 
one  hundred  yards  of  cloth  will  exchange  for  nine 
bushels,  and  the  wages  of  all  workmen  per  week  will 
be  nine  bushels,  this  being  the  amount  for  which  the 
produce  of  a  week's  labor  (one  hundred  yards  of  cloth) 
will  exchange.  The  cultivation  of  still  poorer  lands 
being  required,  on  which  the  labor  of  one  week  will 
produce  but  eight  or  seven  or  a  still  less  number  of 
bushels,  wages  will  decline  to  a  like  amount. 

The  produce  of  industry  and  the  rate  of  interest  re- 
maining unaltered,  a  rise  of  wages  would  reduce  the 
value  of  food,  and  raise  in  a  like  degree  the  value  of 
other  commodities.    A  rise  of  wages  would,  to  use  a  term 


THE  RELATION  OF  RENT  TO    WAGES.       107 

of  Mill  and  his  school,  throw  out  of  cultivation  the 
poorer  lands  and  raise  the  margin  of  cultivation,  and 
in  this  way  the  value  of  food  would  fall  and  that  of  other 
commodities  would  rise.  The  eifect,  then,  of  a  fall  of 
both  wages  and  interest,  or  a  fall  of  either  one,  the  other 
reniainiuo^  unchanged,  is  to  increase  the  value  of  food 
and  other  raw  material,  and  to  decrease  the  value  of 
other  commodities;  in  other  words,  to  cause  an  approxi- 
mation of  the  value  of  food  and  other  raw  material  to 
the  value  of  those  commodities  produced  by  their  con- 
sumption. If  five  bushels  of  wheat  and  ten  pounds 
of  cotton  are  consumed  in  the  production  of  one  hun- 
dred yards  of  cloth,  wages  and  interest  will  depend  on 
the  value  of  wheat  and  cotton.  While  twenty  yards  of 
cloth  will  exchange  for  the  above  amount  of  wheat  and 
cotton,  eighty  yards  will  remain  to  be  distributed  as 
wages  and  interest,  but  as  the  value  of  wheat  and  cotton 
increases  so  that  first  thirty,  then  forty  or  more,  of  the 
hundred  yards  of  cloth  must  be  given  in  exchange  for 
them,  the  return  for  labor  and  capital  is  reduced  by  a 
like  amount.  It  is,  then,  the  margin  between  the  value 
of  what  is  consumed  in  production  and  what  is  pro- 
duced, on  which  wages  and  interest  depend,  and  they 
increase  as  the  margin  is  enlarged.  In  other  words,  the 
return  for  labor  and  capital  depends  on  the  approxi- 
mation of  the  value  of  food  and  raw  material  to  that 
of  finished  commodities.     As  both  wages  and  interest 


108   THE  PREMISES  OF  POLITICAL   ECONOMY. 

fall,  or  as  one  of  them  falls,  the  other  being  unaffected, 
the  margin  will  be  less  and  the  approximation  be 
greater,  while  the  margin  will  be  increased  and  the 
approximation  decreased  by  a  rise  of  either  wages  or 
interest,  or  of  both  of  them.  This  is  the  effect  of  a 
change  of  wages  on  values,  and  a  rise  of  wages  not 
affecting  all  commodities  in  a  like  manner,  all  those 
propositions  which  affirm  that  the  rate  of  profit  depends 
on  wages  are  incorrect,  and  Mill's  attempts  to  save  the 
propositions  of  the  older  economists,  who  elucidated 
the  theory  of  distribution  as  if  there  were  but  two 
factors, — wages  and  profits, — are  failures.  He  only 
succeeds  in  giving  a  false  coloring  to  many  economic 
truths,  which,  while  confusing  his  own  views  and  those 
of  the  reader,  renders  the  true  laws  and  relations  of 
distribution  clouded  and  invisible. 

If  we  are  to  obtain  a  correct  statement  of  the  laws 
of  wages,  it  can  only  be  done  by  placing  rent  in  its 
proper  place  as  one  of  the  factors  of  distribution,  in- 
vestigating not  only  the  relations  of  wages  and  profits, 
but  also  of  wages  and  rent.  In  other  words,  it  must 
be  determined  what  are  the  conditions  according  to 
which  wages  can  rise  at  the  expense  of  either  profits 
or  rent,  or  when  to  their  benefit  wages  will  fall. 

So  long  as  the  number  of  laborers  is  so  small  that 
all  can  be  employed  on  lands  of  the  best  quality,  the 
rate  of  wages  depends  upon  profits,  but  when  popula- 


THE  RELATION   OF  RENT  TO    WAGES.       109 

tion  increases,  so  that  the  supply  of  food  is  no  longer 
obtained  at  the  lowest  cost,  from  any  limitation  to  the 
field  of  employment,  rent  arises.  Now  there  being 
three  factors  in  the  distribution  of  produce,  the  possi- 
bility of  raising  wages  no  longer  is  limited  to  the  ques- 
tionable possibility  of  reducing  profits ;  for  wages  under 
these  circumstances  can  rise  as  well  by  a  reduction  of 
rent  as  of  profits. 

I  have  in  the  previous  chapters  discussed  the  nature 
of  rent  and  the  effect  that  a  change  of  the  demand 
for  commodities  has  on  rent,  and  the  fallacies  of  the 
current  view  on  this  subject.  I  now  wish  to  show  the 
effect  which  a  change  in  the  demand  for  commodities 
has  on  the  possibility  of  a  rise  of  wages  at  the  expense 
of  rent.  If,  as  the  price  of  food  becomes  higher,  poor 
lands  are  converted  into  good  lands,  and  there  is  not, 
as  is  commonly  asserted,  an  inexhaustible  supply  of 
poorer  and  poorer  lands  that  can  be  brought  into  culti- 
vation as  the  price  of  food  increases,  then,  as  the  com- 
munity progresses,  the  proportion  of  good  lands  to  the 
poor  lands  increases,  and  the  greater  part  of  the  pro- 
duce is  obtained  from  good  lands. 

Let  us  suppose  two  nations  having  an  equal  supply  of 
food,  in  one  of  which  one-half  the  food  is  produced  on 
land  that  yields  no  rent,  while  on  the  other  only  one- 
tenth  of  the  produce  is  furnished  by  such  lands.     It  is 

plain  that  in  these  cases  there  would  be  a  great  difFer- 

10 


110  THE  PREMISES   OF  POLITICAL   ECONOMY. 

ence  in  the  power  of  the  laborers  to  reduce  rent  by 
economizing  food.  It  would  doubtless  be  impossible 
in  the  first  case  for  the  laborers  to  accomplish  anything. 
So  great  a  reduction  as  one-half  in  the  consumption  of 
food  would  doubtless  be  beyond  their  powers.  If, 
however,  only  one- tenth  of  the  food  was  produced  on 
lands  yielding  no  rent,  this  reduction  could  be  easily 
accomplished,  and  their  wages  increased  by  the  fall  of 
rent. 

The  ratio  of  good  lands  to  the  poor  is,  then,  the  all- 
important  factor  in  determining  the  possibility  of  an 
increase  of  wages.  If  all  the  lands  are  good  and  yield 
rent,  as  they  do  in  most  old  countries,  then  there  is 
the  possibility  of  a  much  higher  rate  of  wages,  if  the 
laborers  will  consent  to  the  proper  method  to  obtain 
the  increase.  That  as  the  price  of  food  declines  the 
supply  decreases  but  little,  is  manifest  from  the  results 
of  American  competition  on  English  agriculture.  No 
land  has  been  thrown  out  of  cultivation  in  England 
by  the  fall  of  prices,  nor  has  the  quantity  of  food  pro- 
duced been  reduced.  The  same  fact  was  plainly  shown 
by  the  small  effect  of  the  late  hard  times  in  reducing 
the  food-supply,  while  the  fact  that  the  laborers  did 
not  suffer  seriously  for  want  of  food  shows  that  they 
can,  if  they  really  desire,  reduce  their  consumption  of 
food  to  such  a  degree  as  to  produce  a  low  price  of  food. 
As  low  a  price  can  at  any  time  again  be  obtained  by  a 


THE  RELATION   OF  RENT   TO    WAGES.       m 

reduction  of  their  consumption,  either  througli  a  bet- 
ter economy  of  what  they  eat  or  a  reduction  in  the 
amount  wasted  in  drink ;  all  alcoholic  drinks  being 
made  from  food-stuff's,  and  requiring  much  more  land 
to  be  cultivated  than  would  otherwise  be  necessary. 
If  it  requires  a  million  acres  to  produce  the  food  con- 
sumed in  the  manufacture  of  liquor,  then  if  its  con- 
sumption ceased  either  a  million  acres  of  poor  land 
could  be  thrown  out  of  cultivation,  if  there  be  poor 
lands  in  cultivation,  or  if  not,  these  acres  could  be  used 
to  produce  food.  On  either  supposition  there  would  be 
a  marked  reduction  in  the  price  of  food.  The  same 
objection  holds  to  the  use  of  tobacco  as  to  the  use  of 
liquor.  The  land  used  for  this  purpose  either  contracts 
the  area  used  for  the  production  of  food,  or  requires  the 
cultivation  of  a  much  poorer  class  of  lands.  In  either 
case  a  rise  of  rent  and  a  reduction  of  wages  follow. 

Laborers  are  continually  trying,  usually  with  ill 
success,  to  increase  their  wages,  but  no  endeavor  is 
made  to  reduce  the  price  of  those  articles  which  they 
wish  to  purchase  with  their  wages,  although  here  they 
have  a  field  where  they  could  produce  great  eifects  if 
they  would  use  the  same  energy  which  they  display  in 
their  contests  with  capital.  If  they  succeed  in  obtain- 
ing higher  wages,  it  is  questionable  whether  their  real 
wages  are  increased.  They  always  endeavor  to  obtain 
food  and  drink  with  their  increased  wages,  and  the 


112   THE  PREMISES   OF  POLITICAL  ECONOMY. 

rise  in  price  of  these  articles  so  much  reduces  the  value 
of  their  wages  that  little  or  none  of  the  increase  is  left. 
This  is  clearly  shown  by  the  rise  in  the  price  of  food 
accompanying  the  rise  of  wages  at  the  end  of  the  crisis 
of  1873.  Every  advance  of  wages  was  accompanied  by 
a  like  advance  of  rent  in  its  various  forms,  so  that  now 
the  laborers  are  little  or  no  better  off  than  before.  No 
better  plan  for  the  benefit  of  landlords  could  be  devised 
than  to  have  wages  increased,  since  the  laborers  always 
adopt  a  course  of  action  that  only  ends  in  transferring 
their  wages  to  the  landlords. 

It  is  femarkable  that  laborers  do  not  stop  their  dis- 
cussion of  wages  long  enough  to  consider  what  must  be 
the  inevitable  result,  whatever  their  wages  may  be,  so 
long  as  they  expend  their  money  in  the  present  manner. 
How  much  more  food  does  each  family  obtain  now 
than  before  the  late  rise  of  wages,  and  how  much  less 
house-room  does  each  family  now  have  than  they  had 
when  a  few  years  ago  rents  were  one-half  their  present 
rate?  If  these  and  other  similar  questions  were  asked 
and  discussed,  it  would  show  how  little  the  supply  of 
food  and  houses  is  enlarged  by  the  rise  in  the  price  of 
food  and  in  the  rent  of  houses.  The  increased  price  of 
these  alters  the  disti'ibution  of  wealth,  but  has  little 
influence  on  its  production  in  as  far  as  it  affects  articles 
demanded  by  the  laborers.  The  laborers  are  attempt- 
ing to  do  an  impossible  thing,  since  while  the  mass  of 


TEE  RELATION  OF  RENT  TO    WAGES.       113 

the  wealth  produced  is  the  result  of  their  labor,  they 
all  want  only  the  produce  of  the  labor  of  but  a  small 
portion  of  their  number.  Two-thirds  of  them  are 
employed  in  other  pursuits  than  agriculture,  and  still 
most  laborers  refuse  to  consume  anything  else  than 
agricultural  produce.  While  this  is  the  case  they  will 
get  the  result  of  only  one-third  of  their  labor,  no  matter 
what  their  nominal  wages  be.  Their  determination  to 
get  food  and  drink  for  all  their  wages  will  cause  the 
value  of  food  to  rise,  so  that  all  their  wages  will  pur- 
chase only  the  necessary  food  and  what  they  drink. 

The  laborers  have  also  other  resources  besides  this  for 
raising  wages  at  the  expense  of  rent.  They  can  change 
their  consumption  of  food  from  articles  which  nature 
produces  scantily  to  those  produced  more  abundantly, 
or  they  can  consume  more  of  articles  produced  in 
climates  of  which  the  best  lands  are  as  yet  not  wholly 
occupied,  and  consume  less  freely  of  articles  from  places 
where  the  demand  for  their  produce  is  so  great  as  to 
cause  much  rent  to  be  paid.  This  problem  has  already 
been  discussed  in  the  chapter  on  the  social  causes  pro- 
ducing a  high  price  for  food,  and  hence  a  single  ex- 
ample is  needed  to  show  its  bearings  on  the  rate  of 
wages. 

A  demand  for  whiskey  or  beer  is  a  demand  for  a 

class  of  lands  already  in  use  and  on  which  high  rent  is 

paid,  and  this  rent  will   be  further  increased  by  the 
h  10* 


114  THE  PREMISES  OF  POLITICAL   ECONOMT. 

demand  for  whiskey  or  beer,  since  these  drinks  are 
made  from  the  common  cereals  used  for  food.  On  the 
other  hand,  a  demand  for  coffee  is  a  demand  for  another 
class  of  lauds  of  which  but  a  small  portion  is  in  use. 
A  change  of  demand  from  whiskey  and  beer  to  coiFee 
would  much  reduce  the  rent  of  lands  on  which  the 
common  cereals  are  grown,  while  much  more  coffee 
could  be  produced  without  a  material  increase  in  price. 
Hence  the  whole  gain  in  the  reduction  of  rent  on  the 
grain-producing  lands  would  come  to  the  laborers  as  in- 
creased wages.  The  use  of  liquor,  and  other  means  by 
which  the  food-supply  is  wasted,  is  not  merely  a  de- 
struction of  capital,  which  only  interests  the  consumers, 
their  families  and  friends.  If  the  demand  for  food 
when  no  liquor  was  drunk  would  cause  the  price  of 
wheat  to  be  one  dollar  per  bushel,  while  the  increased 
demand  caused  by  the  use  of  strong  drink  raise  the 
price  to  one  dollar  and  twenty-five  cents,  by  compelling 
a  resort  to  poorer  lands,  then  all  persons,  even  those 
who  do  not  drink,  lose  twenty-five  cents  on  every 
bushel  they  consume,  since  they  are  forced  to  pay  that 
much  more  for  their  food  than  they  would  otherwise 
have  to  do. 

In  saying  that  the  demand  should  be  changed  from 
articles  like  wheat  to  those  like  corn,  potatoes,  or  rice, 
of  which  much  more  can  be  produced  on  the  same 
ground,  I  do  not  mean  to  infer  that  the  use  of  wheat 


THE  RELATION  OF  RENT   TO    WAGES.       115 

should  cease.  The  demand  for  wheat  is  so  great  that 
the  supply  cannot  be  obtained  from  the  land  for  which 
it  is  best  adapted  ;  and  wlien  land  better  fitted  for  other 
ci'ops  is  sown  to  wheat,  the  price  of  wheat  rises  to  such 
a  point  that  the  cultivation  of  poorer  land  is  profitable. 
This,  of  course,  causes  all  the  better  wheat  lands  to 
pay  higher  rent,  while  if  a  less  amount  of  wheat  were 
demanded,  its  price  would  fall  and  wages  rise.  Cli- 
matic conditions  fix  the  number  of  good  acres  for  wheat, 
corn,  rice,  and  all  other  articles,  and  when  each  acre 
is  devoted  to  what  it  is  best  fitted,  the  price  of  all  kinds 
of  food  is  low  and  wages  are  high.  Nature  will  not 
change  to  suit  our  notions ;  we  must  conform  to  her 
laws.  So  long  as  the  food  of  a  people  is  composed  of 
a  few  articles,  like  wheat  and  beef,  wages  must  be  low, 
since  a  demand  for  them  alone  causes  such  a  waste  of 
the  productive  forces  of  nature  that  but  little  is  pro- 
duced, and  from  that  little  much  is  taken  as  rent. 

The  tendencies  of  our  present  civilization  having  as 
an  effect  the  concentration  of  all  industry  in  a  few 
places  to  which  all  others  are  tributary,  the  question 
necessai'iiy  arises  whether  this  concentration  has  any 
effect  upon  the  rate  of  wages.  If  we  suppose,  as  is 
often  the  case,  that  on  account  of  the  close  proximity 
of  coal  and  iron  some  one  point  has  a  real  advantage 
over  every  other  place  in  a  country  for  producing  iron, 
and  so  much  advantage  that  it  is  the  interest  of  every 


116  THE  PREMISES   OF  POLITICAL   ECONOMY. 

other  place  that  their  iron  be  produced  at  this  point, 
what  would  be  the  eflPect  on  the  distribution  of  wealth 
as  place  after  place  were  induced  to  obtain  their  iron 
here  in  exchange  for  their  products?  A  little  consid- 
eration will  make  it  plain  that  wages  must  fall.  Those 
places  that  were  nearest  would  have  the  greatest  ad- 
vantage in  the  exchange,  and  while  trade  was  carried 
on  with  them  only,  wages  would  be  high,  as  at  every 
point  there  is  a  like  efficiency  of  labor,  and* of  rent 
there  would  be  none.  When,  however,  more  distant 
points  begau  to  trade  in  the  place,  wages  must  fall 
enough  to  equal  the  cost  of  transportation.  The  whole 
labor  used  to  produce  the  iron  and  carry  it  to  these 
more  distant  points  and  bring  back  their  products 
would  be  less  efficient  than  that  employed  in  making 
exchanges  with  the  nearer  points.  There  cannot  be 
two  rates  of  wages  in  the  same  market,  and  hence  the 
wages  of  all  must  sink  to  the  lower  rate.  If  a  ton  of 
iron  would  exchange  on  the  home  market  for  thirty 
bushels  of  wheat,  and  it  cost  five  bushels  of  wheat  to 
transport  it  to  a  more  distant  point  and  bring  back 
wheat  in  exchange,  as  soon  as  this  trade  begins  the  ton 
of  iron  must  exchange  for  twenty-five  bushels  of  wheat 
at  the  home  market.  As  still  more  distant  points  made 
their  exchanges  at  this  place,  the  price  of  iron  must 
still  further  decline,  and  that  of  wheat  go  up,  which  is 
the  same  as  a  reduction  of  wages.     If  wages  did  not 


THE  RELATION  OF  RENT   TO    WAGES.       117 

go  down  the  exchange  could  not  be  made,  and  wages 
must  continue  to  decline  as  long  as  more  and  more  dis- 
tant points  continue  to  be  brought  into  commercial 
relations. 

The  decline  of  wages  is  the  condition  on  which  such 
a  trade  can  be  carried  on,  no  matter  what  be  the  ag- 
gregate gain  to  the  nation  at  large.  To  illustrate 
more  generally,  let  us  suppose  a  city  to  be  formed  in  a 
fertile  plain,  from  which  population  extended  out  on 
all  sides,  the  conditions  of  trade  being  such  that  it  were 
advantageous  to  manufacture  and  trade  in  this  one 
place,  what  was  lost  in  cost  of  transportation  being 
made  up  by  more  efficient  production  by  manufactur- 
ing on  a  large  scale.  As  production  extended  farther 
and  farther  from  the  city  the  cost  of  transportation 
would  be  greater  at  each  extension  of  cultivation,  and 
the  price  of  food  would  rise  and  that  of  other  commo- 
dities fall,  and  by  so  much  would  wages  be  reduced. 
While  according  to  our  supposition  the  gross  produce 
is  in  proportion  to  the  number  of  laborers  employed, 
and  as  great  as  ever,  still  wages  must  decline,  since 
some  portions  of  that  labor  are  less  efficient  than  others, 
and  with  free  competition  no  laborer  can  obtain  more 
than  those  least  productively  occupied. 

The  gains  of  any  of  the  laborers  from  the  advan- 
tages of  production  on  a  large  scale  and  of  foreign 
trade  cannot  be  greater  than  those  of  the  laborers  who 


118   THE  PREMISES   OF  POLITICAL   ECONOMY. 

are  least  benefited,  and  this  is  the  same  as  saying  that 
they  obtain  no  benefit,  the  most  .disadvantageously 
located  havinar  but  nominal  gains  in  the  exchanoje. 

If  the  commerce  and  industry  settles  in  two  or  more 
cities,  the  difference  in  the  efficiency  of  labor  is  less, 
and  wages  will  be  higher  than  if  all  industry  were  con- 
gregated at  one  city.  The  larger  the  number  of  the 
cities  and  the  better  the  distribution  of  the  population, 
the  greater  will  be  the  rate  of  wages,  the  difference  in 
the  efficiency  of  labor  being  less ;  and  the  smaller  this 
difference  (the  gross  product  of  labor  being  the  same) 
the  greater  will  be  the  wages  and  the  less  will  be  the 
rent.  The  landlords  as  a  class  are  interested  in  having 
the  population  congregated  in  as  few  places  as  possible ; 
the  welfare  of  the  laborers,  on  the  other  hand,  is 
furthered  by  anything  which  causes  a  better  distribu- 
tion of  population  and  brings  them  nearer  the  pro- 
ducers of  food. 

If  the  laborers  ever  advance  far  enough  to  investi- 
gate the  causes  which  determine  the  prices  of  the  arti- 
cles which  they  consume,  they  will  see  how  much  more 
powerful  a  lever  for  increasing  real  wages  they  have 
in  combining  to  influence  the  price  of  food  than  in 
combining  to  increase  money  wages.  The  increase  of 
money  wages  is  at  best  but  small,  for  it  reduces  the 
profit  of  capital.  To  economize  the  food-supply,  to 
cause  a  better  distribution  of  population,  and  to  change 


THE   RELATION  OF  RENT  TO    WAGES.       119 

the  demand  of  food  so  as  to  reduce  rent,  not  only  raise 
wages  but  also  profits,  and  enable  capital  so  to  in- 
crease as  to  employ  more  labor,  not  only  increasing, 
therefore,  the  wages  of  labor  but  also  the  demand  for 
labor. 

Production  is  limited  by  the  field  of  employment, 
and  every  change  by  which  food  is  saved  and  used,  not 
for  pleasure  but  only  to  preserve  health,  or  by  which 
the  products  of  the  whole  world  are  more  fully  de- 
manded, increases  the  field  of  employment  and  enables 
more  capital  and  labor  to  be  employed  and  raises  both 
wages  and  profits. 

There  is  one  other  point  of  importance  in  deter- 
mining wages  to  which  it  is  necessary  to  refer,  namely, 
the  condition  of  the  agricultural  population.  So  long 
as  they  are  in  a  miserable  condition,  and  through  defec- 
tive laws  are  deprived  of  the  protection  needed  for  the 
prosecution  of  their  industry,  the  amount  of  produce 
will  be  small  compared  with  what  it  should  be.  Thus 
the  field  of  employment  and  production  is  limited,  and 
wages  fall  both  through  the  limit  to  production  and 
through  the  influx  to  the  cities  of  country  labor  seek- 
ing employment.  It  is  not  probable  that  the  laborers 
of  the  cities  if  left  to  themselves  would  increase  in 
numbers  faster  than  the  food-supply  should,  but  when 
the  country  population  is  ignorant  or  deprived  of  their 
natural  rights,  the  result  cannot  but  be  disastrous  to  the 


120   THE  PREMISES   OF  POLITICAL   ECONOMY. 

laborers  of  the  cities,  who  not  only  must  compete  with 
the  surplus  country  population,  but  must  also,  from  the 
ignorance  prevailing  in  the  country,  have  their  food- 
supply  lessened.  Laborers  who  wish  high  wages  must 
be  careful  to  do  all  in  their  power  to  place  the  lands  of 
the  country  in  the  hands  of  those  who  will  produce  the 
most,  to  aid  the  spread  of  education  among  the  country 
population,  and  to  change  the  laws  of  the  nation  so  that 
those  who  improve  lands  shall  have  proper  protection. 
Only  by  these  and  like  means  can  the  increase  of  the 
food-supply  be  made  rapid  enough  to  supply  the 
demands  of  an  increasing  population  without  an  in- 
crease of  rent.  Every  true  reform  must  begin  with 
measures  relieving  the  agricultural  classes  of  their 
burdens.  A  rise  of  wages  cannot  precede,  but  must 
follow  the  decline  in  the  price  of  food.  It  is  only  when 
the  laws  sufficiently  encourage  the  growth  of  intelli- 
gence among  the  agricultural  classes  that  they  can  dis- 
place all  the  obstacles  to  the  increase  of  food,  and  make 
all  land  that  should  be  cultivated  of  so  high  a  degree 
of  fertility  that  the  price  of  food  would  fall  below  the 
cost  of  production  on  the  best  lands  now  in  use.  Then 
rent  will  become  a  very  subordinate  element  in  the  dis- 
tribution of  wealth,  and  labor  and  abstinence  will  have 
their  proper  reward. 


CHAPTER    V. 


FREE   COMPETITION. 


The  advantages  of  free  exchange  and  competition 
are  obvious,  and  have  been  often  explained  and  ex- 
emplified by  economists  of  all  schools,  but  the  disad- 
vantages have  been  entirely  overlooked,  or  deemed  so 
subordinate  as  not  to  be  worthy  of  attention.  Most 
economists  boldly  declare  that  a  state  of  freedom,  both 
in  domestic  and  foreign  exchange,  is  always  beneficial 
to  all  parties,  and  that  interference  on  the  part  of  the 
state  does  incalculable  injury.  As  to  the  benefit  of 
free  foreign  trade,  there  is,  of  course,  a  wide  difference 
of  opinion,  but  the  benefits  of  free  competition  in  do- 
mestic trade  are  almost  universally  regarded  as  beyond 
dispute.  Yet  the  subject  of  free  competition  really  in- 
volves all  those  issues  which  are  so  earnestly  discussed 
under  the  head  of  foreign  exchange,  and  a  solution  of 
the  difficulties  of  the  latter  problem  cannot  be  obtained 
till  the  benefits  and  injuries  of  free  competition  in  do- 
mestic exchange  have  been  determined.  If  it  be  asked 
why  free  competition  is  beneficial,  the  ready  answer  is, 

it  causes  everything  to  be  produced  where  it  can  be 
I-  11  121 


122  THE  PREMISES  OF  POLITICAL  ECONOMY. 

made  at  the  lowest  rate,  and  wherever  coiiiniodities  are 
cheapest,  the  least  labor  has  been  employed  in  their 
production.  Both  protectionists  and  free-traders  use 
the  criterion  of  cheapness  to  determine  the  advantages 
of  exchange.  If  a  protectionist  be  asked  why  his  sys- 
tem is  superior,  he  will  doubtless  reply  that  it  makes 
everything  cheaper,  and  he  will  quote  statistics  to  show 
how  much  iron,  cotton,  cloth,  and  other  commodities 
have  fallen  in  price  since  the  introduction  of  a  high 
tariff. 

This  criterion  of  cheapness  is  clearly  and  tersely  set 
forth  by  John  Stuart  Mill,  while  treating  of  the  rela- 
tive merits  of  production  on  a  large  and  small  scale. 

"  Wherever  there  are  large  and  small  establishments 
in  the  same  business,  that  one  of  the  two  which  in  ex- 
isting circumstances  carries  on  the  production  at  great- 
est advantage  will  be  able  to  undersell  the  other.  The 
power  of  j)erraanently  underselling  can  only,  generally 
speaking,  be  derived  from  increased  effectiveness  of 
labor;  and  this,  when  obtained  by  a  more  extended 
division  of  employment,  or  by  a  classification  tending 
to  a  better  economy  of  skill,  always  implies  a  greater 
produce  from  the  same  labor,  and  not  merely  the  same 
produce  from  less  labor ;  it  increases  not  the  surplus 
only,  but  the  gross  produce  of  industry." 

In  this  passage  we  have  the  issue  plainly  presented. 
Cheapness,  the  power  of  permanently  underselling,  is 


FREE  COMPETITION.  123 

an  unfailing  test  of  the  advantages  of  different  systems 
of  production.  If  an  article  is  produced  and  sold 
cheaper  by  one  system  than  by  another,  it  indicates  a 
more  efficient  use  of  labor,  a  better  economy  of  skill, 
and,  lastly,  which  is  most  important  of  all,  a  greater 
produce  from  the  same  labor.  If  increased  efficiency 
of  labor  is  the  only  cause  of  a  reduction  of  prices,  wages 
and  profits  can  have  no  effect  on  the  value  of  commodi- 
ties. Wages  must  go  up  as  profits  go  down,  and  profits 
rise  as  wages  fall ;  each  exactly  counterbalancing  the 
effect  of  the  other,  they  produce  no  change  in  prices. 
Is  this  correct  ?  Are  there  no  commodities  that  change 
in  price  when  profits  fluctuate?  If  a  lowering  of 
profits  were  always  attended  by  an  increase  of  the  real 
reward  of  the  laborers.  Mill's  view  would  be  correct, 
but  when  the  two  fall  conjointly  because  the  price  of 
food  has  risen  through  a  limit  to  the  field  of  produc- 
tion being  reached,  commodities  do  not  exchange  at  the 
same  values  as  before.  A  mere  statement  of  the  case 
shows  that  the  price  of  food  could  not  rise  unless  food 
exchanged  for  all  other  commodities  in  a  new  propor- 
tion. It  does  not  follow  that  there  has  been  no  change 
in  the  value  of  commodities  because  there  has  been  no 
change  in  profits.  The  real  reward  of  the  laborers  may 
fall  and  the  price  of  food  rise  without  affecting  profits, 
but  any  change  in  the  relation  of  the  two  by  which 
the  rate  of  profits  is  not  altered  must  have  an  effect 


124  THE  PREMISES  OF  POLITICAL   ECONOMY. 

on  prices,  and  in  so  far  as  this  should  happen  prices 
would  be  affected  by  something  else  than  the  efficiency 
of  labor,  and  the  power  to  undersell  would  depend  not 
on  this  efficiency  alone,  as  is  claimed  by  Mill,  but  also 
on  the  wages  of  labor  and  the  price  of  food. 

Prices  are  affected  by  those  changes  in  wages  caused 
by  the  competition  of  one  class  of  laborers  with  an- 
other. Some  classes  of  laborers  have  greater  efficiency 
than  others;  but  if  they  require  more  wages  than  the 
others,  it  is  a  problem  for  the  capitalist  to  determine 
which  is  more  advantageous  for  him  to  employ.  If  the 
first  class  have  double  the  efficiency,  and  demand  less 
than  double  the  wages,  they  are  cheaper  to  him  than 
the  second  class ;  but  if  the  first  class  demand  more 
than  double  the  wages,  the  second  class  will  be  more 
profitable  to  the  capitalist.  So  long  as  there  is  work 
for  both  classes  all  can  get  employment,  but  as  popula- 
tion increases  and  the  limit  of  the  field  of  industry  is 
reached,  all  cannot  get  work,  and  then  the  question 
arises,  which  class  will  survive?  Unquestionably  it 
will  be  the  class  of  laborers  that  cost  their  employers 
the  least,  for  those  capitalists  who  pay  the  least  in  pro- 
portion to  the  efficiency  of  their  laborers  can  undersell 
their  competitors. 

In  every  country  there  are  many  classes  of  laborers, 
who  vary  much  in  efficiency  and  in  the  amount  of 
wages  requisite  for  their  needs  and  support.     In  his 


FREE   COMPETITION.  125 

discussion  of  normal  values,  Prof.  Cairnes,  having 
clearly  sliown  the  existence  of  these  various  classes, 
seeks  to  determine  the  ratio  at  which  the  commodities 
of  one  class  exchange  with  those  of  other  classes. 
While  the  importance  of  this  discussion  is  conceded, 
there  is  a  much  more  important  question  to  which 
I  wish  to  call  attention,  namely,  wliat  determines 
the  relative  numbers  of  the  various  classes.  Prof. 
Cairnes  calls  them  non-competing  groups,  but  this  is 
true  only  from  one  point  of  view.  There  is  some 
reason  why  the  lower  classes  of  laborers  cannot  do  the 
work  of  the  higher,  for  if  no  obstacle  stood  in  the 
way  they  would  compete,  and  the  wages  of  all  classes 
be  the  same.  The  higher  and  more  skilful  classes, 
however,  can  do  the  work  of  the  lower  classes,  can  do 
it  much  more  skilfully  than  the  lower  classes,  and 
get  a  much  greater  return  from  the  same  labor.  A 
mechanic,  for  instance,  could  plough,  sow,  and  do  other 
farm-work  much  better  than  the  ordinary  farm-hand. 
He  has  greater  intelligence,  and,  with  a  little  practice, 
would  have  greater  efficiency  in  farm-work.  So,  too, 
those  classes,  having  more  skill  and  intelligence  than 
the  mechanic,  can  perform  his  work  much  better  than 
he ;  but  he  cannot  compete  with  them  in  their  work. 
The  reason,  then,  why  the  higher  classes  cannot  drive 
out  the  lower  classes  from  all  occupations  is  not  be- 
cause they  cannot  do  the  work  of  the   lower  classes. 

11* 


126   THE   PREMISES   OF  POLITICAL   ECONOMY. 

They  can  do  it,  and  much  more  efficiently  than  it  is 
now  done.  It  is  because  they  would  demand  so  much 
higher  wages  that  the  cost  of  labor  would  be  greater 
than  it  now  is. 

It  is  here  in  the  competition  of  different  classes  of 
laborers  that  wages  have  an  effect  on  prices.  Any 
work  that  the  lower  classes  can  do  is  done  by  them, 
not  because  they  are  more  efficient,  but  because  they 
demand  less  wages  in  proportion  to  their  efficiency 
than  the  higher  classes.  Tlie  capitalist  employing  the 
lower  class  of  laborers  under  these  conditions  can  sell 
cheaper  than  his  rivals,  and  if  one  capitalist  makes  use 
of  a  low  class  of  labor  the  others  must  do  likewise, 
or  be  driven  out  of  the  market.  As  a  country  grows 
older  and  the  field  of  employment  becomes  more  fully 
occupied,  the  higher  classes  of  laborers  are  driven  from 
one  employment  after  another,  until,  at  last,  they  per- 
form only  such  labor  as  the  lower  classes  cannot  do. 
When  there  is  a  surplus  of  laborers,  the  desire  to 
undersell  causes  the  substitution  as  much  as  possible 
of  the  lower  classes  for  the  higher  and  more  skilful. 
In  some  cases  the  substitution  is  complete  and  all  of 
the  higher  classes  are  driven  out.  Usually  they  do 
not  all  lose  employment,  only  their  relative  numbers 
being  diminished,  and  thus  the  cost  of  production  is 
reduced. 

This  suggests  the  reason  why  the  introduction  of 


FREE   COMPETITION.  127 

machinery  and  production  on  a  large  scale  is  so  profit- 
able. They  require  for  their  operation  a  much  smaller 
number  of  the  higher  classes  in  proportion  to  tiie 
whole  number  of  the  laborers  employed.  When  ma- 
ciiinery  is  introduced  the  work  of  the  laborer  is  much 
more  simple  than  before,  and  requires  less  skill.  Like- 
wise when  the  scale  of  an  industry  is  enlarged,  there 
being  a  greater  division  of  labor,  much  less  skill  and 
versatility  are  required  of  each  laborer.  In  both  cases 
a  lower  class  of  laborers  can  be  emjiloyed,  and  the  pro- 
ducts  can  be  sold  cheaper.  The  gross  produce  of  in- 
dustry,  however,  is  much  less  than  it  would  be  if  none 
of  the  lower  classes  were  employed,  since  a  given 
quantity  of  food  will  not  support  a  greater  number  of 
the  lower  classes  tiian  of  the  higher,  while  the  efficiency 
of  the  higher  classes,  being  much  greater,  will  cause 
much  more  to  be  produced. 

The  manufacture  of  pins  is  generally  used  to  illus- 
trate the  so-called  advantage  of  a  better  economy  of 
skill  arisino;  from  the  substitution  of  unskilled  labor 
for  the  skilled.  It  is  said  that  the  wages  now  paid  in 
England  for  making  pins  vary  from  four  pence  to  four 
shillings  a  day,  and  if  four  shillings  a  day  were  paid 
to  skilled  laborers  for  doing  all  the  work,  the  price  of 
pins  would  be  more  than  three  times  as  high  as  it  now 
is  and  there  would  be  a  serious  waste,  as  labor  is  most 
efficient  in  production  when  each   individual   is  em- 


128  THE  PREMISES   OF  POLITICAL   ECONOMY. 

ployed  upon  work  best  suited  to  his  skill  and  physical 
strength.  This  argument  would  be  good  if  there  were 
no  limit  to  the  food-supply,  if  all  laborers  could  be 
employed,  and  if  there  were  no  competition  among 
laborers  for  places.  Whenever  the  field  of  employ- 
ment is  fully  occupied,  every  laborer  of  a  higher  class 
who  is  driven  out  of  one  occupation  by  the  employ- 
ment of  laborers  of  a  lower  class  is  excluded  entirely 
from  employment,  or  at  least  the  relative  number  of 
his  class  employed  is  reduced,  and  the  gross  product  of 
industry  is  diminished  according  as  his  efficiency  sur- 
passes that  of  the  laborer  displacing  him.  Inventions 
and  discoveries  are  constantly  being  made  by  which 
the  average  return  for  labor  is  increased,  and  everv 
such  improvement  renders  possible  the  employment  of 
a  greater  proportion  of  dear  but  efficient  labor.  Yet 
the  tendency  is  just  the  opposite.  Less  use  is  made 
of  skilled  labor  when  the  employment  of  machinery 
and  production  on  a  large  scale  allow  a  greater  division 
of  labor,  a  continually  smaller  proportion  of  skilled 
labor  being  employed  as  the  use  of  machinery  becomes 
more  extended  and  the  scale  of  production  is  enlarged. 
The  eifect  of  a  substitution  of  cheap  for  skilled  labor 
must  be  detrimental  when  the  average  return  of  the 
industry  in  which  skilled  labor  is  economized  is  less 
than  the  average  return  for  all  labor.  It  is  not  proven 
that  the  wages  of  skilled  labor  in  the  manufacture  of 


FREE   COMPETITION.  129 

pins  (four  shillings  a  day)  is  greater  than  the  average 
return  for  all  English  labor,  and  hence  it  cannot  rightly 
be  inferred  that  the  more  extended  use  of  skilled  labor 
in  this  case  would  be  a  serious  waste,  or  that  the  gross 
produce  of  English  industry  would  thereby  be  reduced. 
The  power  of  underselling  is  not,  as  is  claimed  by 
Mill,  due  always  to  the  greater  efficiency  of  labor ;  on 
the  contrary,  the  power  is  usually  obtained  by  the  sub- 
stitution of  cheap  labor  for  that  which  is  more  efficient 
but  dearer.  The  cheapness  caused  by  the  employment 
of  low-priced  labor  is  not  universal ;  a  low  price  of 
the  products  of  labor  is  produced,  but  a  high  one  for 
food,  the  increase  in  the  price  of  food  going  to  the 
landlords  as  rent.  When  the  price  of  food  is  so  low 
that  every  laborer  receives  the  whole  produce  of  his 
labor,  the  laborers  of  the  higher  classes  receive  enough 
to  supply  themselves  not  only  with  food,  but  with 
other  useful  and  necessary  things.  As  soon  as  the 
competition  of  laborers  caused  by  a  surplus  of  labor 
begins,  the  question  arises  not  who  can  produce  the 
most,  but  who  can  spare  the  most  to  buy  food  Avith. 
The  class  which  can  do  this  survives,  and  the  others 
either  disappear,  or  only  remain  in  places  where  cir- 
cumstances prevent   competition    from   affi^cting  their 


wages. 


The  lower  classes  can  almost  always,  if  they  are  not 
prevented  by  some  circumstances  in  the  nature  of  the 


130  THE  PREMISES   OF  POLITICAL   ECONOMF. 

industry,  or  by  some  legal  restraint,  displace  the  higher, 
just  as  poor  money  drives  out  the  good.  There  is  no 
more  reason  to  believe  that  capitalists  will  employ  effi- 
cient labor,  if  its  cost  is  high,  than  to  believe  that  they 
will  meet  their  own  obligations  with  costly  money  when 
poor  but  cheap  money  would  do  as  well.  Cheap  money 
will  drive  out  the  good,  and  cheap  labor,  the  efficient, 
except  in  cases  where  cheap  labor  and  cheap  money  are 
excluded  by  circumstances  or  law. 

If  we  further  take  into  consideration  the  causes  de- 
termining who  shall  cultivate  the  land,  the  case  of  cheap 
labor  becomes  still  worse.  As  the  question  of  survival 
in  other  occupations  rests  not  on  the  ability  to  produce 
tiie  most,  but  on  the  ability  to  pay  the  highest  price  for 
food,  so  in  agriculture  the  question  is  not  who  can  pro- 
duce the  greatest  quantity  of  food,  but  who  can  pay  the 
most  rent.  The  public  welfare  demands  that  the  great- 
est possible  quantity  of  food  be  produced,  but  the  land- 
lords are  interested  only  in  rent,  which  is  the  net 
produce,  and  they,  not  the  public,  decide  who  shall 
cultivate  the  lands.  If  we  suppose  two  competing 
classes  of  laborers,  one  having  ten  per  cent,  less  effi- 
ciency of  labor  and  requiring  eleven  per  cent,  less 
wages  than  the  other,  this  less  efficient  labor  will  dis- 
place the  dearer.  The  gross  industry  of  the  country 
will  be  reduced  ten  per  cent,  provided  the  same  number 
of  laborers  as  formerly  could  be  supplied  with  food. 


FREE   COMPETITION.  13I 

But  the  same  number  cannot  be  supported,  for  the 
cheap  labor  now  being  used  in  agriculture  will  be  ten 
per  cent,  less  efficient  than  the  dearer  labor  formerly- 
employed,  and  will  therefore  produce  ten  per  cent,  less 
food.  Hence  but  ninety  per  cent,  of  the  former  popu- 
lation can  be  supported,  and  as  each  individual  is  ten 
percent,  less  efficient,  the  production  will  be  but  eighty- 
one  per  cent,  of  the  amount  formerly  produced,  making 
a  deduction  of  nineteen  per  cent,  in  the  gross  produce 
of  the  country  in  order  to  give  the  landlords  one  per 
cent,  more  than  they  formerly  received. 

There  is  yet  another  cause  for  the  displacement  of 
skilled  labor  on  a  large  scale  in  the  change  in  the 
demand  for  commodities  which  the  survival  of  a  low 
class  of  laborers  occasions.  Cheap  and  poorly-made 
commodities  can  be  made  on  a  large  scale  of  production 
more  advantageously  than  can  the  dearer  and  better- 
made  articles  ;  custom-made  boots,  ready-made  clothing, 
cheap  jewelry,  and  other  like  commodities  which  a  low 
class  of  laborers  desire,  are  the  result  of  production  on  a 
large  scale.  On  the  other  hand,  the  finer  articles  of  ap- 
parel, costly  ornaments,  works  of  art,  and  most  of  the 
other  commodities  sought  after  by  persons  of  means  and 
refinement,  are  hand-made,  and  require  a  high  class  of 
laborers  for  their  production.  A  low  class  of  laborers 
will  demand  the  produce  of  a  low  class  of  labor,  and 
whenever  they  displace  a  high  class  of  laborers  from 


132  THE  PREMISES   OF  POLITICAL   ECONOMY. 

one  occupation  by  accepting  a  lower  rate  of  wages,  they 
displace  others  of  the  high  class  of  laborers  by  a 
change  in  their  demand  for  commodities  which  require 
the  cheap  instead  of  the  dearer  and  better  made  articles 
to  be  produced. 

At  the  same  time  a  low  class  of  laborers,  through 
their  exclusive  demand  for  a  few  articles  of  food,  reduce 
the  food-supply.  The  amount  of  food  that  can  be 
produced  depends  on  what  is  desired,  and  when  there 
is  a  demand  for  only  a  few  articles  of  food,  but  a  mere 
fraction  can  be  produced  of  what  could  otherwise  be 
obtained  if  the  variety  best  suited  to  natural  conditions 
were  demanded.  When,  also,  there  is  only  a  demand 
for  a  few  articles  of  food,  a  much  lower  class  of  laborers 
can  be  employed  in  agriculture  than  would  be  the  case 
if  a  greater  variety  were  desired.  It  requires  much 
greater  skill  on  the  part  of  the  farmers  to  cultivate  a 
great  variety  of  crops  than  it  does  to  raise  a  single  crop, 
and  where  the  work  is  simple,  a  low  and  ignorant  class 
of  laborers  can  survive.  Thus  one  displacement  of 
skilled  workmen  causes  another,  and  wherever  the 
cheap  laborers  once  begin  to  drive  out  the  skilled  they 
soon  get  possession  of  most  occupations,  both  through 
the  change  in  the  demand  for  commodities  and  through, 
the  increase  in  production  on  a  large  scale. 

In  comparing  two  methods  of  production  to  deter- 
mine which  of  the  two  will  have  the  greater  gross  pro- 


FREE   COMPETITION.  I33 

duction  economists  usually  regard  only  the  productive 
powers  of  the  workmen,  and  overlook  the  effect  of  dif- 
ferent modes  of  consumption  on  tlie  gross  amount  tiiat 
will  be  produced.  If  A  can  produce  more  yards  of 
cloth  in  a  day  than  B,  the  inference  is  immediately 
drawn  that  if  A  displaces  B  the  gross  produce  of  the 
country  will  be  increased.  Yet  this  conclusion  is  likely 
to  be  erroneous,  and  certainly  the  reasoning  is  de- 
fective. The  main  element  in  determining  the  gross 
produce  of  any  country  is  tlie  use  which  is  made  of 
the  land  and  the  economy  of  the  food-supply.  Nature 
can  produce  some  articles  of  food  more  abundantly 
than  others,  and  some  men  take  their  pleasures  in  a  way 
that  will  cause  a  greater  consumption  of  food  than  do 
the  habits  of  other  men.  A  difference  of  fifty  per  cent, 
in  productive  power  would  be  an  uncommon  superi- 
ority of  one  class  of  laborers  over  another,  while  of 
many  articles  of  food  the  land  of  a  country  produces  a 
many-fold  greater  quantity  than  of  other  kinds  of  food, 
and  the  difierence  in  the  economy  of  food  consumed  by 
different  persons  is  even  greater  than  the  difference  in 
their  productive  power. 

Let  us  suppose  that  A  produces  fifty  per  cent,  more 
of  any  manufactured  commodity  than  B,  and  that  B 
consumes  those  kinds  of  food  of  which  the  same  land 
and  labor  can  produce  twice  as  much.    Then  twice  the 

number  of  persons  like  B  can  be  supported  by  a  coun- 

12 


134  THE  PREMISES  OF  POLITICAL  ECONOMY. 

try,  and  with  the  same  average  income  which  persons 
like  A  would  have,  provided  that  in  a  nation  of  people 
like  A  half  the  people  were  engaged  in  agriculture. 
In  a  nation  of  A's  one  man  produces  enough  food  for 
two  men,  while  in  a  nation  of  B's  one  man  can  pro- 
duce sufficient  food  for  four  persons,  the  land  being 
twice  as  productive  of  the  articles  which  men  like  B 
desire.     As  a  result,  three  of   the  four  men  can  be 
spared  from  agriculture  for  other  work.    A  being  fifty 
])er  cent,  more  productive  in  manufacturing  than  B, 
can,  we  will  suppose,  produce  six  yards  of  some  com- 
modity in  a  day,  while  B  can  produce  only  four  yards. 
A  must  give  half  of  every  six  yards  in  exchange  for 
food,  one-half  the  laborers   in  his  society  being  agri- 
culturists, and  has  three  yards  remaining  for  his  own 
use.     B,  however,  gives  but   one-fourth  of   his  four 
yards  for  food,  only  that  portion   of  the  workmen  of 
his  nation  being  agriculturists,  and  hence  has  also  three 
yards  remaining.     The  average  income  of  each  person 
in  both  societies  will  therefore  be  the  same, — food  and 
the  equivalent  of  three  yards  of  cloth  for  each  day's 
work.     Yet  when  men  like  A  survive,  the  gross  prod- 
uce will  be  but  one-half  of  what  it  would  have  been 
if  men  like  B  had  displaced  those  like  A. 

This  proves  that  the  gross  produce  of  any  nation  is 
mainly  determined  by  the  economy  and  the  consump- 
tion of  food,  and  not  by  the  greater  productivity  in 


FREE   COMPETITION.  I35 

manufacturing.  At  the  same  time  the  average  income 
of  a  people  consuming  the  articles  of  food  more  easily 
produced,  will  be  as  great,  if  not  greater,  than  that  of 
the  other  nation,  a  much  smaller  proportion  of  the 
laborers  being  engaged  in  agriculture.  The  fact  that 
those  who  consume  the  articles  of  food  less  easily  pro- 
duced is  admitted  only  as  an  illustration,  since  it  ac- 
cords with  the  commonly-accepted  doctrine  that  the 
cheapest  producer  is  most  productive.  I  contend,  how- 
ever, that  the  opposite  is  true,  those  workmen  being 
most  productive  in  all  industries  who  conform  to  the 
natural  conditions  by  which  they  are  surrounded.  They 
will  have  developed  in  them  a  greater  number  of  the 
qualities  given  to  them  by  nature,  and  they  are  most 
efficient  who  have  the  greatest  number  of  active  qual- 
ities developed,  and  not  they  who  sell  their  produce  at 
the  cheapest  rate. 

The  evil  results  arising  from  a  low  rate  of  interest 
are  possibly  more  detrimental  to  the  increase  of  indus- 
try than  those  produced  by  a  fall  of  wages.  When  the 
rate  of  interest  has  fallen  so  low  that  the  greater  por- 
tion of  the  people  no  longer  have  sufficient  inducement 
to  save,  society  being  divided  into  two  classes,  capital- 
ists and  laborers,  the  rate  of  interest  is  then  mainly 
determined  by  two  considerations, — the  accumulation 
of  wealth  and  the  capitalist's  place  of  residence.  The 
richer  the  individual  the  easier  it  is  for  him  to  save. 


136   THE  PREMISES   OF  POLITICAL   ECONOMY. 

This  point  has  been  so  often  observed  and  illustrated 
that  it  only  needs  to  be  stated,  but  the  other  considera- 
tion, the  place  of  residence  of  the  capitalist,  will  require 
considerable  illustration,  as  its  effect  on  the  rate  of  in- 
terest has  been  entirely  overlooked  by  most  economists. 
The  rate  of  interest  is  not  the  only  consideration 
which  influences  the  capitalist  to  save;  he  is  also 
largely  influenced  by  the  purchasing  power  of  money. 
If  money  will  purchase  more  at  one  time  than  at  an- 
other, the  rate  of  interest  will  be  lower  during  the  first 
period  than  during  the  second,  for  the  same  money  will 
better  supply  the  wants  of  the  capitalist ;  or,  in  other 
words,  the  same  wants  can  be  supplied  with  less  money. 
Hence,  when  the  increase  of  capital  reduces  interest, 
capitalists  will  save  for  a  lower  rate  of  interest  than 
they  would  if  the  value  of  money  was  not  so  great. 
Just  so  the  place  of  residence  of  the  capitalist  influences 
the  rate  of  interest,  money  having  different  values  in 
different  places.  A  capitalist  in  a  place  where  he  can  buy 
what  he  wants  cheap  has  an  advantage  over  those  who, 
from  their  location,  must  pay  more  for  what  they  de- 
sire. When  the  pressure  from  ah  increase  of  capital 
comes,  those  most  advantageously  situated  will  submit 
to  the  greatest  fall  in  the  rate  of  interest,  the  same  in- 
terest haying  more  value  to  them  than  to  others  in  un- 
favorable situations,  who  will,  as  a  class,  either  cease 
to  save  or  remove  to  more  advantageous  situations. 


FREE   COMPETITION.  ]37 

For  a  capitalist  a  city  offers  more  advantages  than 
the  country.  In  the  country,  it  is  true,  food  is  cheaper 
than  in  the  city,  but  this  constitutes  but  a  small  share 
of  the  capitalist's  expenditure,  and  in  all  other  respects 
the  city  offers  the  better  inducements. 

Another  important  consideration  to  the  capitalist  is 
the  rate  of  wages.  If  wages  are  low,  those  articles  of 
which  his  consumption  mainly  consists  will  be  lower 
than  where  wages  are  high,  as  the  greater  part  of  what 
he  consumes  is  manufactured  commodities.  These  arti- 
cles fall  in  price  as  wages  fall,  and  places  where  wages 
are  low  extend  advantages  to  capitalists  which  other 
places  where  wages  are  high  cannot  offer.  As  a  coun- 
try grows  in  wealth  and  the  rate  of  interest  falls,  the 
advantages  of  the  best  place  of  residence  will  have  ad- 
ditional weight  with  the  capitalists.  The  country  will 
be  more  and  more  drained  of  its  capital  by  the  gradual 
but  constant  movement  of  its  capitalists  to  cities  which 
offer  better  advantages  to  capitalists  for  enjoying  their 
incomes,  and  from  these  sections  of  the  country  and 
cities  where  the  rate  of  wages  is  high  to  those  where 
the  wages  are  low. 

It  is  almost  needless  to  mention  that  the  same  influ- 
ences which  induce  capitalists  to  congregate  in  cities 
and  in  places  where  wages  are  low,  operate  with  equal 
force  on  the  landlords  of  a  country.  While  the  capi- 
talists and  landlords  derive  their  revenues  from  dif- 

12* 


138   THE   PREMISES  OF  POLITICAL  ECONOMY. 

ferent  economic  sources,  still,  as  wealth  accumulates 
aucl  interest  falls,  both  the  capital  and  land  of  a  coun- 
try fall  into  the  hands  of  the  same  class  of  persons; 
that  is,  those  who  will  save  for  the  least  consideration. 
These  in  the  long  run  will  be  those  who,  from  the 
advantages  of  situation  and  from  the  concentration  of 
wealth  in  the  hands  of  a  few  persons,  can  force  the 
rate  of  interest  to  so  low  a  point  that  to  all  others  the 
inducement  to  save  becomes  insufficient. 

When  it  is  asserted  that  the  landlords  will  remove 
to  large  cities,  those  holding  the  legal  title  are  not 
always  meant,  but  often  those  who  are  the  virtual 
owners,  the  holders  of  mortgages.  Whenever  land  is 
mortgaged  the  real  landlord  is  not  the  farmer  who 
owns  the  land,  for  his  share  is  usually  not  more,  and 
is  often  much  less,  than  the  amount  of  capital  em- 
ployed on  the  place  in  buildings  and  improvements. 
The  real  landlord  is  he  who  holds  the  mortgage,  and 
he  need  not  reside  near  the  land,  but  may  live  wher- 
ever his  desire  or  fancy  dictates. 

The  influence  of  these  considerations  on  the  capitalist 
class,  and  consequent  gradual  concentration  of  wealth 
in  a  few  places  and  in  the  hands  of  fewer  and  fewer 
persons,  may  be  observed  everywhere,  and  nowhere 
plainer  than  in  the  United  States.  Every  year  sees  the 
country  lose  more  and  more  of  its  capital,  and  the  land 
fall  into  the  hands  of  persons  who,  even  if  they  retain 


FREE   COMPETITION.  139 

the  nominal  ownership,  are  not  its  real  owners.  Tliey 
are  merely  laborers,  who  have  little  or  no  hope  of  ever 
becoming  the  real  owners,  since  the  price  of  land  is 
so  high  that  the  interest  eats  up  all  the  profits  of  the 
farmer.  One  by  one  those  farmers  who  are  out  of  debt 
dispose  of  their  farms  and  remove  to  the  neighboring 
towns  and  cities,  and  their  places  are  supplied  by  those 
who  have  no  time  for  amusement  and  care  little  for 
churches  or  schools.  Thus  whole  sections  are  gradually 
becoming  stripped  of  their  wealth,  and  are  inhabited 
only  by  families  whose  necessities  compel  unceasing 
labor  for  scant  returns,  and  deprive  them  of  the  leisure 
necessary  to  the  making  of  intelligent,  thinking  citi- 
zens, while  those  who  really  enjoy  the  produce  of  the 
land  live  often  hundreds  of  miles  away,  and  have  no 
interest  or  concern  in  the  prosperity  of  the  places  whence 
come  their  revenues. 

The  causes  which  really  underlie  the  misery  of  Ire- 
land, the  absenteeism  of  its  landlords,  are  at  work  in 
our  own  country,  and  will  in  time  produce  the  same 
sad  results;  we  then  shall  have  on  our  hands  not 
merely  one  Ireland,  but  a  country  full  of  Irelands,  the 
tillers  and  occupants  of  the  land  sending  away  all  they 
produce  and  receiving  little  or  nothing  in  return. 

While  capitalists  are  located  everywhere  throughout 
the  country,  there  is  good  ground  to  believe  that  any 
load  advantage  for  the  investment  of  capital  will  be 


140  THE  PREMISES  OF  POLITICAL   ECONOMY. 

utilized.  Industries  will  then  be  carried  on  mainly  in 
the  places  where  food  is  cheapest.  Labor  will  natu- 
rally gravitate  thither,  food  being  the  laborer's  chief 
article  of  consumption.  All  this  is  changed  by  the 
localization  of  capital  and  its  concentration  in  the 
hands  of  a  few  persons  knowing  or  caring  little  for  the 
advantages  which  other  places  than  those  now  utilized 
may  possess  for  carrying  on  trade  or  for  manufacturing. 
So  long,  for  instance,  as  Wales  or  Ireland  has  local 
capitalists  eager  to  invest  their  money,  there  is  good 
ground  for  assurance  that  the  advantages  of  these 
countries  will  be  developed,  but  after  they  are  once 
drained  of  capitalists  and  landlords,  the  remnant  lack- 
ing energy,  and  only  with  great  difficulty  meeting 
their  obligations,  the  fact  that  certain  industries  are 
carried  on  at  Sheffield  and  Manchester  is  not  evidence 
that  these  cities  have  natural  advantages  not  possessed 
by  Ireland  or  Wales. 

After  the  land  of  a  country  is  all  in  use,  the  only 
way  to  increase  the  produce  of  industry  is  by  improv- 
ing the  land  and  educating  the  laborers.  Capital  when 
held  by  a  few  persons  wanting  only  safe  investments, 
never  adopts^  either  of  these  modes  of  extending  pro- 
duction. If  land  to  any  extent  is  to  be  improved,  it 
must  be  done  by  those  who  live  and  labor  upon  it,  and 
from  their  own  earnings ;  and  if  the  laborers  are  to  get 
any  education  they  must  pay  for  it  themselves,  unless, 


FREE   COMPETITION.  141 

perchance,  the  government  provides  it.  For  these  rea- 
sons laborers  on  land  are  usually  ignorant  and  ineffi- 
cient, the  land  is  but  partially  improved,  and  produc- 
tion is  checked  by  an  artificial  limitation  to  the  field  of 
employment,  brought  about  by  the  rate  of  interest 
sinking  so  low  that  only  a  few  persons  most  advanta- 
geously situated  have  sufficient  inducement  to  save. 

In  such  a  social  state  the  laborers  will  be  congregated 
in  large  numbers  in  the  few  places  most  attractive  to 
the  capitalists.  Wherever  the  capitalists  go  the  laborers 
must  follow.  Most  of  the  food  will  be  sent  to  the 
capitalists  owning  land  for  rent,  and  the  workmen 
must  leave  their  old  homes  and  seek  the  food.  Just 
as  a  swarm  of  bees  must  follow  the  queen  bee,  moving 
when  she  moves,  and  stopping  when  she  stops,  so  must 
the  mass  of  the  people  not  saving  for  themselves  follow 
after  the  few  who  possess  capital,  and  congregate  in 
swarms  where  the  capitalists  reside. 

Those  who  have  uot  all  the  qualities  necessary  for 
production  are  dependent  on  those  who  have  all  that  is 
required,  and  the  greater  the  dependence  of  any  class 
the  less  will  their  interests  influence  production.  If 
we  had  a  telescope  large  enough  to  discover  the  size 
and  number  of  the  cities  in  distant  planets,  we  could 
determine  the  prevailing  rate  of  interest.  The  larger 
the  cities,  and  the  fewer  their  number,  the  greater  the 
accumulation  of  wealth  and  the  lower  is  the  rate  of 


142  THE  PREMISES  OF  POLITICAL   ECONOMY. 

interest.  Whenever  a  nation  favors  a  low  rate  of  in- 
terest and  the  accumulation  of  wealth  in  the  hands  of 
a  few  persons,  a  great  deterioration  of  tlie  laboring 
classes  is  sure  to  follow.  On  one  hand,  they  lose  the 
inducement  to  save,  and  the  qualities  which  a  high 
rate  of  interest  tend  to  develop.  On  the  other  hand, 
by  being  crowded  together  in  large  cities,  they  lose 
many  means  of  enjoyment  which  were  free  to  them 
when  scattered  throughout  the  country.  Pure  air,  the 
beauties  of  nature,  and  the  many  innocent  rural  sports 
are  lost,  and  all  the  remaining  pleasures  are  those  ex- 
clusive ones  derived  from  the  consumption  of  liquor, 
tobacco,  and  other  rude  enjoyments  attractive  only  to 
persons  deprived  of  other  pleasures. 

As  has  been  shown  in  a  former  chapter,  the  value  of 
agricultural  and  mineral  products  is  liable  to  sudden 
changes,  since  a  slight  increase  in  the  demand  for  these 
articles  must  cause  so  great  a  rise  in  their  price  before 
the  supply  can  be  increased  from  new  land  and  mines 
with  great  obstacles  to  their  use,  while  a  slight  decrease 
in  the  demand  will  cause  a  very  low  price,  there  being 
no  land  or  mines  in  use  having  a  great  cost  of  produc- 
tion, which  will  go  out  of  use  as  soon  as  the  price  of 
these  products  begins  to  fall.  The  suddenness  and 
extent  of  fluctuation  in  value  of  all  commodities  are 
greatly  increased  as  soon  as  production  on  a  large  scale, 
combined  with  a  low  rate  of  interest,  causes  the  laborers 


FREE   COMPETITION.  J 43 

who  would  save  to  be  displaced  by  those  having  no 
desire  to  save  for  themselves.  When  the  price  of  any 
article  falls  those  who  have  capital  lay  up  a  stock  of 
the  commodity,  and  thus  the  fall  in  value  is  checked 
by  the  increase  in  the  demand.  Those  who  do  not 
save  must  reduce  their  purchases  when  prices  fall. 
The  decline  of  prices  reduces  the  amount  of  work  to 
be  performed,  and  when  no  work  can  be  obtained  their 
consumption  of  commodities  must  be  reduced  to  a 
minimum.  When  the  mass  of  the  laborers  have  no 
capital,  the  decline  in  price  of  the  produce  of  a  few 
industries  causes  a  decline  in  the  demand  for  all  com- 
modities through  the  reduced  consumption  of  those 
without  work.  All  industries  are  affected,  and  through 
the  accumulated  effect  of  the  reduced  demand  for  labor 
in  the  various  trades  there  is  a  sudden  and  a  great 
decline  in  the  value  of  all  commodities.  On  the  other 
hand,  as  soon  as  altered  industrial  circumstances  offer 
work  to  the  laborers  there  is  a  sudden  and  rapid  rise 
of  values,  caused  by  the  urgent  needs  of  those  laborers 
who  for  a  time  have  been  compelled  to  do  without  many 
of  the  necessaries  of  life.  Production  on  a  large  scale, 
and  free-trade  likewise,  tends  to  increase  the  fluctuation 
in  values,  since  they  cause  the  industries  of  the  whole 
world  to  be  carried  on  in  a  few  places,  which  are  so  in- 
timately connected  with  one  another  that  whatever  af- 
fects one  centre  of  trade  reacts  upon  all  other  commer- 


144  THE  PREMISES   OF  POLITICAL  ECONOMY. 

cial  centres.  So  long  as  each  nation  was  commercially 
independent,  a  decline  in  values  in  one  country  caused 
an  increased  export  of  commodities  to  other  lands  where 
prices  were  unchanged.  When,  however,  all  nations 
are  intimately  joined  in  commercial  relations,  no  relief 
from  a  fall  of  values  can  be  obtained  by  exportation 
of  goods,  since  all  parts  of  the  commercial  world  being 
affected  by  similar  circumstances  suffer  at  the  same  time 
from  a  decline  of  values. 

These  causes  of  the  fluctuation  of  values  also  affect 
the  value  of  gold  and  silver,  destroying  that  perma- 
nency of  value  which  renders  them  so  superior  to  other 
kinds  of  money  as  a  medium  of  exchange.  All 
writers  who  have  advocated  correct  doctrines  concern- 
ing money  lay  great  stress  on  the  fact  that  a  decline  in 
the  value  of  tlie  precious  metals  in  one  nation  will 
cause  them  to  be  exported  to  other  nations  M'here  their 
value  is  higher.  This  argument  for  the  superiority  of 
metallic  money  is  of  no  importance  where  all  nations 
are  joined  in  such  intimate  commercial  relation  that 
they  really  form  but  one  nation.  Under  these  condi- 
tions the  rise  and  decline  of  the  value  of  the  precious 
metals  will  happen  at  the  same  time  all  over  the  world. 
The  same  amount  of  money  is  not  needed  at  all  times, 
there  being  a  greater  amount  of  trade  and  commerce 
some  years  than  others,  yet  the  amount  of  money  will 
be  the  same  at  all  times,  when  the  fact  that  all  nations 


FREE   COMPETITION.  I45 

enjoy  prosperity  and  suffer  ill  fortune  together  prevents 
such  an  exporting  of  the  precious  metals  from  one 
nation  to  another  as  would  give  them  a  greater  stability 
of  value. 

In  yet  another  way  does  the  increase  of  cheap  labor 
increase  the  fluctuation  of  the  value  of  money.  In 
former  times,  before  independent  workmen  were  dis- 
placed by  production  on  a  large  scale,  almost  every 
workman  possessed  a  hoard  of  money,  which  he  en- 
larged when  the  value  of  money  fell,  and  put  into 
circulation  when  the  value  rose.  A  multitude  of  such 
hoards  acted  as  a  reservoir,  preventing  great  changes  in 
the  value  of  money.  By  the  displacement  of  producers 
on  a  small  scale  this  reservoir  has  been  lost.  The 
laborer  of  to-day  instead  of  possessing  a  hoard  of 
money  laid  away  for  hard  times,  usually,  by  means  of 
the  credit  system,  spends  his  wages  before  they  are 
earned.  Wherever  a  low  rate  of  interest  induces  busi- 
ness men  as  well  as  workmen  to  make  an  extensive  use 
of  their  credit  and  economize  the  use  of  capital  as 
much  as  possible  by  means  of  production  on  a  large 
scale,  all  commodities,  including  money,  will  be  subject 
to  sudden  changes  in  value.  The  extent  of  fluctuations 
of  values  has  gradually  increased  as  more  extended  use 
has  been  made  of  low  interest  and  cheap  labor,  and 
when  this  combination  has  displaced  all  independent 

producers  who  save  for  themselves,  these  fluctuations 
Q       k  13 


146   TEE  PREMISES   OF  POLITICAL   ECONOMY. 

of  value  will  be  so  great  as  to  render  all  production  a 
lottery,  and  prevent  every  one  from  saving  except  those 
who  have  capital  enough  to  control  some  industry. 
•  The  effect  of  low  wages  and  low  interest  is  an  ap- 
proximation of  the  price  of  raw  material  to  that  of 
manufactured  commodities.  As  has  been  shown  in  the 
previous  chapter,  the  reward  of  labor  and  abstinence 
is  dependent  upon  the  difference  between  the  price  of 
food  and  other  raw  materials  and  that  of  the  finished 
commodities.  The  value  of  agricultural  produce  is  low 
as  compared  with  finished  commodities  when  only  those 
lands  having  great  original  fertility  are  tilled.  As 
soon,  however,  as  the  supply  of  these  lands  is  exhausted 
and  others  must  be  cultivated  requiring  the  expenditure 
of  capital  to  fit  them  for  tillage,  the  approximation  of 
prices  begins.  There  is  a  class  of  capitalists  who  prefer 
safe  investments  and  a  low  rate  of  interest,  and  a  class 
of  laborers  who  accept  low  wages  rather  than  make  the 
sacrifice  necessary  to  become  skilled  and  efficient  or  to 
save  capital.  To  neither  of  these  classes  does  the 
preparation  of  new  lands  for  tillage  offer  any  attraction, 
since  such  enterprises  are  not  safe  investments  to  capi- 
talists, nor  sought  after  by  indolent,  inefficient  work- 
men. These  two  classes  combining  Ixid  for  the  field 
of  employment  open  to  them,  and  there  is  only  one 
method  open  for  their  success.  In  exchange  for  food 
and  raw  material  they  must  offer  a  greater  quantity  of 


FREE   COMPETITION.  147 

what  they  produce  than  can  be  done  by  the  other  class 
who  are  skilled  and  save  for  themselves.  If  ten  yards 
of  cloth  is  offered  by  the  more  efficient  class  for  a 
bushel  of  wheat,  this  combination  of  low  interest  and 
cheap  labor  will  give  eleven,  or  a  greater  number  of 
yards,  and  thus  drive  out  their  superiors  by  the  ap- 
proximation of  the  prices  of  raw  material  to  manufac- 
tured articles  which  is  in  this  manner  brought  about. 
There  are  no  means  by  which  any  class  of  laborers  or 
capitalists  can  escape  the  result  of  this  approximation 
of  prices.  If  one  class  of  producers  are  willing  to  ex- 
change twenty  yards  of  calico  for  a  bushel  of  wheat, 
all  producers  offering  less  for  wheat  lose  theJr  trade, 
while  those  offering  twenty  yards  will  be  displaced  as 
soon  as  a  combination  of  cheaper  labor  and  Jower 
interest  can  give  twenty-two  yards  for  a  bushel.  In 
this  way  the  approximation  of  prices  becomes  greater 
as  a  nation  grows  older,  and  as  a  result  the  intelligent 
classes  are  gradually  displaced,  and  rent  absorbs  a  large 
part  of  what  is  produced  on  the  limited  field  of  em- 
ployment open  to  the  surviving  combination. 

It  is  usually  claimed  that  the  competition  of  laborers 
benefits  the  capitalists,  and  that  the  competition  of 
capitalists  benefits  laborers ;  but  this  we  now  see  is  not 
correct.  So  soon  as  a  limit  to  the  field  of  employment 
is  reached  the  result  of  all  competition,  both  of  laborers 
and  capitalists,  is  lower  interest  and  lower  wages,  while 


148   THE  PREMISES   OF  POLITICAL   ECONOMY. 

rent  is  raised  by  the  consequent  approximation  of  the 
price  of  raw  material  to  that  of  manufactured  com- 
modities. 

It  is  objected,  however,  that  laborers  regain  their 
loss  from  low  wages  in  the  lower  prices  at  which  they 
obtain  what  they  consume  of  others'  labor.  So  far 
as  they  are  consumers  of  the  commodities  produced 
by  other  laborers,  they  lose  and  gain  nothing,  while 
all  laborers  lose  by  the  increased  value  of  food  and 
raw  material.  Suppose  three  yards  of  silk,  six  yards 
of  linen,  or  fifteen  yards  of  calico  could  be  exchanged 
for  a  bushel  of  wheat  before  the  fall  of  interest  and 
wages,  and  that  afterwards  four  yards  of  sili^,  eight 
yards  of  linen,  and  twenty  yards  of  calico  were  re- 
quired to  procure  a  bushel  of  wheat.  If  this  were  the 
case,  the  owners  of  wheat  would  make  a  gain  of  one- 
third  in  all  their  exchange  for  silk,  linen,  and  calico, 
and  the  producers  of  these  articles,  while  losing  in  all 
their  exchanges  for  wheat,  would  be  in  the  same  posi- 
tion as  formerly  in  regard  to  the  exchange  of  the 
produce  of  one  laborer  for  that  of  another  laborer; 
tliat  is,  the  ratio  of  exchange  of  silk  for  linen  or  calico, 
or  calico  for  linen  and  silk,  would  be  the  same  as  be- 
fore, a  yard  of  silk  still  exchanging  for  two  of  linen 
and  five  of  calico. 

The  increase  of  the  value  of  wheat  would  not  be  the 
only  gain  of  the  landlords,  for  the  same  labor  and  cap- 


FREE   COMPETITION.  14  9 

ital  as  before  would  be  willing  to  engage  in  production 
for  one-third  less  return  than  formerly,  so  that  agricul- 
tural capital  and  labor  would  be  compelled  to  drop 
one-third  of  their  remuneration.  Thus  the  landlords 
would  not  only  get  one-third  more  for  their  wheat,  but 
the  wheat  would  be  produced  for  them  at  one-third 
less  cost  than  formerly. 

Since  the  power  of  underselling  does  not  necessarily 
arise  from  an  increased  efficiency  of  labor,  and  since 
between  rival  producers  the  question  of  surviving  is 
determined  not  by  the  amount  of  gross  produce,  but 
by  the  amount  of  the  surplus  above  interest  and  wages 
which  can  be  given  for  rent,  it  is  evident  that  produc- 
tion on  a  large  scale  is  not  adopted  as  the  most  economic 
method,  but  because  it  effects  the  largest  utilization  of 
cheap  labor  and  low  interest.  It  is  essential  to  the  suc- 
cess of  production  on  a  small  scale,  and  of  co-operation 
as  well,  that  interest  be  high  enough  to  induce  every 
one  to  save,  and  that  all  the  laborers  be  skilful  and  in- 
telligent. But  they  cannot  develop  skill  and  intelli- 
gence if  the  reward  for  their  labor  is  squeezed  down 
to  its  lowest  possible  limits  by  the  employment  of  cheap 
labor  and  low  interest  in  production  on  a  large  scale. 
Let  us  suppose  that  three  dollars  a  day  is  just  sufficient 
to  induce  laborers  to  become  skilled  and  save  capital 
enough   to    furnish    them   with  self-employment,  and 

that  by  production  on  a  large  scale  one-fourth  less  was 

13* 


150    THE  PREMISES   OF  POLITICAL  ECONOMY. 

produced,  and  at  one-third  less  cost.  In  this  case, 
although  for  every  three  hundred  dollars'  worth  of 
goods  formerly  produced,  only  two  hundred  and 
twenty-five  dollars'  worth  is  now  produced ;  yet  as 
wages  and  interest  have  fallen  one-third,  what  was  for- 
merly sold  for  three  hundred  dollars  can  now  be  ob- 
tained for  two  hundred  and  seventy-five  dollars,  or  one- 
twelfth  less  than  formerly.  Skilled  laborers  must  now 
work  and  save  for  two  dollars  and  seventy-five  cents  a 
day,  and  since  this  is  not  enough  to  induce  laborers  to 
become  skilled  and  save  for  themselves,  they  will  be 
displaced  by  the  producers  on  a  large  scale,  and  the 
gross  produce  of  the  country  will  be  one-fourth  less 
than  before  the  displacement  took  place. 

Of  course  the  term  production  on  a  large  scale  must 
be  used  in  a  relative  sense.  What  at  one  time  would 
be  regarded  as  a  very  large  scale  of  production  would 
at  another  time  seem  extremely  small.  The  main  point 
to  be  kept  in  view  is,  the  advantages  of  cheap  labor  and 
low  interest  are  so  great  that  the  scale  of  production  is 
greatly  extended  in  those  cases  where  it  is  really  bene- 
ficial, and  in  many  cases  where  small  combinations 
of  laborers  are  most  efficient,  they  are  displaced  by  the 
use  of  cheap  labor  and  low  interest  solely  on  account 
of  the  power  of  underselling  which  this  combiuation 
possesses.  For  this  reason  the  scale  of  production  now 
employed  is  not  a  fit  criterion  for  determining  what 


FREE   COMPETITION.  151 

method  of  production  is  most  advantageous.  Nor  will 
a  comparison  of  present  methods  with  those  formerly 
in  use  be  any  more  decisive.  The  restoration  of  any 
former  class  of  laborers  is  not  what  is  desired,  but  the 
preservation  and  enlargement  of  that  class  thinking 
and  saving  for  themselves  who  are  now  reduced  to  so 
small  a  number  by  the  false  economy  of  skill  and  in- 
telligence. 


CHAPTER    VL 

THE  LAW  OF   DIMTNISHENG  EETURNS. 

All  writers,  in  discussing  the  law  of  diminishing 
productiveness  of  the  soil,  have  accepted,  without  dis- 
pute, the  assumption  that  the  return  for  labor  from  a 
given  tract  of  land  could  be  continually  increased  by 
the  use  of  more  labor,  the  point  controverted  having 
been  whether  or  not  the  additional  labor  obtained  a 
greater  or  a  less  proportional  return  than  the  previous 
labor.  Both  parties  seem  to  have  overlooked  the 
third  alternative,  that  the  proportional  return  might 
increase  up  to  a  point  beyond  which  no  additional 
return  could  be  obtained  by  any  amount  of  labor.  If 
this  were  true,  we  would  have  a  law  of  limited  returns 
as  contrasted  with  a  law  of  diminishing  returns.  Then, 
instead  of  a  law  asserting  that  a  greater  number  of 
people  cannot  be  as  well  provided  for  as  a  smaller,  we 
should  have  the  following :  up  to  a  given  figure  the 
greater  number  of  people  e^in  be  better  provided  for 
than  tlie  smaller,  but  a  number  of  people  exceeding 
that  figure  cannot  be  provided  for  at  all.  Against 
such  a  position  the  arguments  used  by  the  advocates 

of  the  law  of  diminishing  returns  would  not  be  valid. 
152 


THE  LAW  OF  DIMINISHING  RETURNS.      I53 

They  argue  that  if  the  law  of  diminishing  returns  were 
not  true,  only  the  best  soils  would  be  cultivated.  Poor 
soils  are  cultivated,  and  this  would  not  be  the  case  if 
the  law  of  diminishing  returns  were  not  operative. 

The  cultivation  of  poorer  soils  and  the  high  price 
of  food  are  accounted  for  by  the  law  of  limited  as  well 
as  by  that  of  diminishing  returns.  If  in  the  case  of 
wheat  the  returns  increased  proportionally  until  sixty 
bushels  to  the  acre  were  harvested,  aud  none  beyond 
this  could  be  obtained  by  any  amount  of  labor,  addi- 
tional acres  would  have  to  be  cultivated  as  the  demand 
for  wheat  increased;  aud  when  all  the  good  land  had 
been  brought  into  use,  inferior  lands  would  have  to  be 
resorted  to,  and  the  price  of  wheat  would  rise  owing  to 
the  increased  cost  of  cultivation. 

The  fact  that  inferior  lands  are  cultivated  shows 
that  the  superior  lands  cannot  supply  the  market,  and 
that  there  is  a  limit  to  the  productivity  of  land,  but 
what  that  limit  is  this  fact  alone  does  not  decide.  If, 
up  to  this  limit,  land  gives  increased  returns  to  the 
labor  employed,  and  will  yield  nothing  further  with- 
out increased  knowledge  or  improvements,  then  new 
and  inferior  lands  would  be  cultivated  as  the  demand 
for  food  increased  just  the  same  as  if  the  law  of 
diminishing  returns  were  true.  The  only  difference 
would  be  that  some  of  the  additional  supply  would  be 
obtained  from  the  old  lands  by  the  use  of  additional 


154  THE   PREMISES   OF  POLITICAL   ECONOMY. 

labor,  if  tlie  law  of  dirainishiDg  returns  were  true; 
while,  on  the  other  supposition,  all  the  increased  supply 
would  come  from  the  new  lauds,  unless  the  increased 
I^rice  would  cause  additional  capital  to  be  used  or  in- 
duce the  farmers  to  use  more  skill  and  better  methods. 
So  far  at  least  as  man  subsists  on  animals  the  law 
is  of  limited  and  not  of  diminishing  returns.  The 
American  Indians  who  lived  on  buffaloes  did  not  suffer 
from  a  limited  increase  of  their  numbers,  since  they 
could  hunt  more  successfully  in  large  than  in  small 
numbers.  When  many  hunted,  so  long  as  they  only 
killed  the  increase  of  the  buffaloes,  they  obtained  a 
greater  proportional  return  for  their  labor  than  when 
only  a  few  engaged  in  the  chase.  When,  however,  they 
killed  more  than  the  increase  of  the  buffaloes,  their 
game  became  scarce,  and  they  had  to  hunt  longer  than 
before  and  get  less  game.  To  Indians,  then,  as  to  all 
races  who  subsist  on  wild  game,  the  law  must  be  that  of 
limited  returns,  an  increase  of  population  being  beneficial 
so  long  as  they  do  not  reduce  the  number  of  animals  on 
which  they  subsist ;  and  they  cannot  increase  their  num- 
bers at  all  beyond  the  number  which  consumes  the  in- 
crease of  the  animals  constituting  their  food.  The  same 
law  applies  to  fisheries  ;  if  more  than  the  increase  of  fish 
be  consumed,  the  labor  of  catching  them  is  increased 
while  the  number  caught  is  diminished.  Still  more  is 
the  law  of  limited  returns  true  of  people  who  live  by 


THE  LAW  OF  DIMINISHING   RETURNS.      I55 

herding  domestic  animals,  such  as  cattle  and  sheep, 
since  their  labor  decreases  as  the  number  of  cattle  or 
sheep  increases,  and  as  long  as  there  is  pasturage,  an 
increase  of  population  is  beneficial ;  but  when  grass 
gives  out  the  population  cannot  increase  at  all.  So  far 
then  as  population  is  supported  by  animal  life  alone 
the  law  of  diminishing  returns  does  not  hold.  If  the 
law  applies  to  anything  it  must  be  to  the  increase  of 
vegetable  life.  When  man  resorts  to  agriculture  for 
food,  or  to  increase  the  food  of  the  animals  on  which 
he  subsists,  the  laws  of  the  increase  of  food  seem  to  be 
different  from  those  by  which  it  was  governed  when  he 
lived  on  animal  food  alone.  A  correct  analysis,  how- 
ever, of  the  causes  by  which  vegetable  life  is  increased 
will  reveal  the  same  law  as  that  of  limited  returns. 

If  an  ultimate  limit  to  the  increase  of  vegetable  life 
on  a  given  area  can  be  shown,  the  truth  of  the  law  of 
limited  returns  will  be  made  clear,  provided  it  can  also 
be  shown  that  this  limit  can  be  reached  without  a  de- 
creasing proportional  return  to  the  labor  employed. 
Such  a  limit  to  the  increase  of  the  food-supply  may  be 
found  in  the  space  needed  by  each  plant  for  its  proper 
growth  and  development.  On  any  field  only  a  certain 
number  of  plants  of  any  kind  can  thrive,  and  if  more 
are  allowed  to  grow,  the  return  will  be  diminished  in- 
stead of  increased.  If  a  farmer  should  sow  eight 
bushels  of  oats  or  wheat  to  the  acre,  his  return  would 


156   THE   PREMISES   OF  POLITICAL   ECONOMY. 

not  be  so  great  as  if  he  sowed  only  three  or  four  bushels, 
the  plants  needing  room,  air,  and  sun  to  mature  prop- 
erly. The  limit  varies  with  different  plants.  If  we 
sow  a  field  to  wheat  and  then  to  rye,  we  may  increase 
the  return  by  the  change  of  plants,  but  every  plant  has 
its  limit,  and  hence  there  must  be  a  limit  to  the  supply 
of  vegetable  food. 

Inasmuch  as  the  extreme  limit  to  which  production 
can  be  forced  is  that  of  space  or  room  for  the  plants, 
the  question  whether  the  law  of  the  return  is  that  of 
limited  or  diminishing  returns  must  depend  upon  what 
are  the  elements  which  contribute  to  the  increase  of 
vegetable  life.  If  labor  is  the  only  or  the  chief  ele- 
ment, then  the  law  of  diminishing  returns  might  be 
true.  If  labor  is  subordinate  to  other  elements  of  a 
very  different  nature,  then  we  must  expect  to  find  that 
the  law  is  that  of  limited  returns. 

The  relation  of  the  law  of  limited  returns  to  knowl- 
edge and  capital  may  be  clearly  stated  in  the  following 
way.  There  is  a  greatest  possible  return  from  a  given 
area;  this  return  is  seldom  obtained,  for  it  requires  a 
conjunction  of  natural  causes  which  rarely  occurs.  Some 
years  it  is  too  cold,  other  years  it  is  too  hot,  some  years 
it  is  too  dry,  others  it  is  too  wet,  some  soils  are  deficient 
in  one  respect  and  others  fail  in  an  opposite  direction. 
All  of  these  and  manv  other  diversities  have  to  be 
taken  into  account,  and  on  the  proper  appreciation  of 


THE  LAW   OF  DIMINISHING   RETURNS.      I57 

them  all  the  result  depends.  More  labor  cannot  do 
much,  and  if  but  little  skill  and  capital  are  used,  the 
crop  will  usually  be  small.  Sometimes,  however,  all 
the  elements  of  nature  are  favorable,  and  then  just  as 
good  a  crop  is  obtained  by  the  poor  farmer  as  by  the 
good.  A  Texas  squatter  can  sometimes  obtain  seventy 
bushels  of  wheat  to  the  acre  without  much  labor, 
merely  from  a  conjunction  of  favorable  circumstances. 
This  is  perhaps  the  extreme  limit  to  the  growth  of 
wheat,  and  scientific  farming  has  for  a  goal  the  attain- 
ment of  this  return  on  all  lands  every  year ;  in  other 
words,  science  would  make  all  lands  good  lands. 

The  use  of  capital  implies  the  use  of  more  labor  for 
a  time  while  the  obstacles  to  cultivation  are  being  re- 
moved. When  they  are  once  overcome  then  the  addi- 
tional labor  is  no  longer  needed.  This  land  can  now 
be  cultivated  with  as  small  an  annual  use  of  labor  as 
can  the  land  free  from  obstructions.  The  fact  that  a 
small  amount  of  labor  obtains  the  largest  possible  yield 
of  food  when  the  land  is  without  obstructions  to  culti- 
vation, and  there  is  a  conjunction  of  favorable  circum- 
stances, shows  that  the  annual  cost  of  cultivating  all  the 
land  that  should  be  cultivated  is  small.  Since  on  some 
fields  there  is  always  a  small  cost  of  production,  and 
on  other  fields  the  cost  is  often  small,  there  is  good 
ground  for  the  belief  that  skill  and  capital  can  cause 

all  improvable  lands  to  give  their  best  yield  with  no 

14 


158   I'ii^  PREMISES  OF  POLITICAL   ECONOMY. 

more  labor  than  is  now  necessary  on  the  best  lands  in 
use. 

Every  increase  of  capital  and  skill  reduces  the  quan- 
tity of  labor  necessary  to  obtain  from  land  the  present 
produce,  and  if  they  displace  more  labor  than  the  addi- 
tional labor  which  can  be  employed  at  a  diminishing 
return,  the  return  as  a  whole  will  be  greater  in  propor- 
tion to  the  labor  expended.  If  three  men  are  displaced 
by  skill  and  capital  to  every  two  additional  men  that 
can  be  employed,  the  whole  number  of  laborers  will 
decrease,  while  the  produce  increases.  Unless  the  in- 
crease of  labor  used  in  agriculture  was  very  small  in 
proportion  to  the  increase  of  capital  and  knowledge,  the 
proportion  of  laborers  engaged  in  agriculture  to  those 
otherwise  employed  could  not  have  constantly  decreased 
as  it  has  done  throughout  modern  times. 

That  the  labor  element  in  agriculture  is  nearly  con- 
stant, not  increasing  much,  if  at  all,  when  a  better 
system  is  introduced,  can  be  clearly  seen  when  we  con- 
sider what  the  function  of  labor  is  in  the  production 
of  food.  All  that  labor  can  do,  to  which  the  law  of 
diminishing  returns  can  be  said  to  apply,  is  in  the  pre- 
paring of  the  soil.  In  very  early  stages  of  agricul- 
tural knowledge  what  labor  alone  could  do  could  be  as 
well  done  as  now.  A  man  with  a  spade  and  rake  can- 
prepare  the  land  as  well  as  any  machine  can  do  it. 
When  machines  are  used,  it  is  not  because  they  do  the 


THE  LAW  OF  DIMINISHING   RETURNS.      159 

work  better  than  it-can  be  done  by  manual  labor,  but 
because  labor  is  spared.  Improved  processes  of  pre- 
paring the  soil  have  simply  found  substitutes  for  man- 
ual labor.  More  labor  had  to  be  expended  where  fal- 
low ploughing  was  customary  than  when  this  became 
unnecessary  through  use  of  a  proper  rotation  of  crops. 
The  ground  had  to  be  ploughed  whether  a  crop  was 
raised  or  not,  and  the  rotation  of  crops  made  the 
ground  more  porous  and  pliable.  Thus  less  labor 
would  prepare  it  as  well  as  before,  and,  besides,  a  crop 
was  obtained  every  year. 

Where  land  is  used  part  of  the  time  for  grazing  and 
meadow,  the  reduction  of  labor  from  what  was  needed 
under  the  old  system  of  agriculture  is  very  marked. 
Such  land  need  not  be  cultivated  more  than  half  of 
the  time,  and  though  half  the  labor  is  dispensed  with, 
yet  a  much  greater  return  is  obtained.  The  rotation 
of  crops  also  requires  fewer  laborers,  as  the  work  is 
scattered  throughout  the  year  and  steady  employment 
is  given ;  the  different  crops  being  cultivated  and 
gathered  at  different  times,  while  in  winter  employ- 
ment is  given  in  the  care  of  the  live-stock,  whereas 
under  the  old  system,  the  return  of  a  few  days'  labor 
had  to  support  the  laborer  the  entire  year.  So  also 
the  use  of  harvesting  machinery  causes  harvesting  to 
be  done  throughout  the  year  instead  of  during  a  few 
days  as  formerly  was   the  case,  thus  dispensing  with 


160  I'HE   PREMISES  OF  POLITICAL  ECONOMY. 

labor  by  giving  steady  work  in  the  machine-shops.  If 
no  other  result  were  obtained  from  improved  processes 
than  this  better  utilizing  of  labor,  this  result  would 
more  than  counteract  any  tendency  there  may  be  to- 
wards diminishing  the  return  from  agriculture. 

The  most  important  conclusion  from  the  foregoing 
facts  yet  remains  to  be  noticed.  It  is  not  enough  that 
there  is  a  rotation  of  crops,  there  must  be  a  different 
rotation  for  each  variety  of  soil  if  the  greatest  return 
for  labor  is  to  be  obtained.  One  soil  is  unfitted  for 
wheat,  another  for  corn,  and  a  third  for  sugar-cane  and 
rice,  the  fourth  for  coffee  or  tea.  Besides  this,  some 
soils  will  bear  a  crop  of  wheat,  or  of  some  other  arti- 
cle for  which  it  is  fitted,  more  frequently  than  will 
other  soils.  Hence  there  must  be  a  difference  not  only 
in  the  crops  for  each  soil,  but  also  a  difference  in  the 
frequency  in  which  each  crop  of  the  rotation  can  be 
harvested  with  profit.  For  instance,  some  soils  will 
bear  a  crop  of  wheat  once  in  three  years,  while  on 
other  soils  once  in  five  or  six  years  is  as  often  as  a  crop 
of  wheat  should  be  raised.  A  rotation  should  be  made 
of  those  crops  which  are  adapted  to  each  variety  of 
soil,  producing  each  crop  as  frequently  as  the  nature  of 
the  soil  will  allow.  Unless  there  is  a  demand  for  all 
the  different  kinds  of  produce,  and  for  that  amount  of 
each  article  of  food  corresponding  to  the  quantity  of 
land  best  fitted  for  its  use,  the  best  rotation  of  crops 


THE  LAW  OF  DIMINISHING  RETURNS.      \Q\ 

cannot  be  utilized,  and  resort  must  be  had  to  some 
other  rotation  less  adapted  to  the  nature  of  the  soil  on 
which  the  crops  are  raised.  Suppose  that  on  a  given 
tract  of  land  the  best  rotation  of  crops  would  produce 
one  million  bushels  of  wheat,  two  million  bushels  each 
of  rye  and  oats,  three  million  bushels  of  potatoes,  and 
five  million  tons  of  grass  and  hay,  and  that  the  demand 
for  food  required  three  million  bushels  of  wheat,  one 
million  bushels  each  of  rye,  oats,  and  potatoes,  and  three 
million  tons  of  grass  and  hay.  In  this  case  the  land 
must  be  sown  to  wheat  more  frequently  than  is  con- 
sistent with  the  greatest  productivity  of  the  soil.  By 
this  change  in  the  crops  not  only  will  the  gross  return 
from  the  land  be  reduced,  but  also  there  must  be  addi- 
tional labor  employed  to  produce  this  diminished  re- 
turn. The  land  will  not  be  mellow  and  porous,  and 
more  manure  and  cultivation  will  be  required  than  if 
the  best  rotation  of  crops  for  the  land  had  been  fol- 
lowed. Wherever  the  demand  for  food  is  such  that 
soils  unfitted  for  a  crop  are  used  for  its  production,  or 
that  a  crop  is  raised  on  land  more  frequently  than  it 
should  be  used  for  this  crop,  there  will  be  a  reduction 
both  of  the  gross  and  average  return  for  labor  on  the 
land.  This  is  the  reason  why  lands  in  old  countries 
require  so  much  labor  for  their  cultivation.  The  de- 
mand for  food  is  limited  to  a  very  few  articles,  such  as 

wheat  or  rye,  potatoes,  and  beef,  while  of  tiie  other 
I  14* 


162  THE  PREMISES   OF  POLITICAL   ECONOMY. 

articles  so  little  is  desired  that  they  cannot  be  produced 
with  that  frequency  which  is  needed  for  the  best  use 
of  the  land.  In  most  countries  the  demand  for  wheat 
is  so  great,  and  its  price  so  higii,  that  it  is  profitable  to 
force  its  cultivation  into  the  rotation  of  crops  as  often 
as  possible.  This  can  only  be  done  by  the  use  of  much 
more  labor  than  would  be  required  for  the  cultivation 
of  other  crops  for  which  the  land  is  better  fitted. 
Wheat  is  not  the  crop  that  is  forced  into  the  rotation 
with  too  great  frequency  in  every  country.  In  some 
districts  it  is  sugar-cane,  or  the  sugar-beet,  in  others  it 
is  coffee,  rice,  or  some  other  crop  which  is  in  great  de- 
mand. The  effect,  however,  is  the  same  in  all  these 
cases.  Additional  labor  must  be  employed  to  overcome 
the  reduced  natural  fertility  of  the  soil  which  an  un- 
fitted rotation  of  crops  necessitates.  Just  as  the  en- 
deavor to  raise  coffee  in  Illinois,  or  oranges  in  Scot- 
land, would  cause  a  needless  expenditure  of  labor,  so  a 
too  frequent  cultivation  of  wheat,  or  of  some  other  article 
of  food  on  any  soil,  causes  a  much  greater  outlay  of 
labor  than  would  be  necessary  if  other  crops  were  used 
for  food  to  a  greater  extent.  Suppose  the  demand  for 
coffee  and  oranges  was  so  great  that  the  lands  best  fitted 
for  their  production  could  not  supply  the  demand,  and 
their  price  rose  so  high  that  their  cultivation  in  Illinois 
and  Scotland  became  profitable,  could  any  one  rightly 
affirm  that  this  increase  of  labor  proved  the  law  of 


TEE  LAW  OF  DIMINISHING   RETURNS.      163 

diminishing  returns?  If  they  could  not,  then  a  too 
great  use  of  wheat,  tobacco,  or  of  any  other  article, 
does  not  prove  the  truth  of  this  law.  There  is  a  great 
difference  between  the  assertion  that  an  increased  de- 
mand for  one  or  some  few  articles  of  food  causes  a  re- 
duced average  return  for  labor,  and  the  claim  that  the 
average  return  is  diminished  by  an  increased  demand 
for  all  articles  of  food  in  that  ratio  for  each  article 
which  will  cause  eacii  tract  of  land  to  be  put  to  the 
best  use.  Tiie  first  assertion  is  doubtless  true.  It  is 
plain  that  no  one  crop,  whether  wheat,  rice,  tobacco,  or 
oranges,  can  be  raised  in  all  countries  and  on  all  soils 
without  a  great  increase  of  the  cost  of  production.  To 
prove  the  second  assertion  will  be  a  difficult  task,  unless 
the  laws  of  nature  are  much  diiferent  from  what  they 
are  now  supposed  to  be.  All  the  facts  at  present  known 
show  that  both  the  average  and  the  gross  return  grad- 
ually increases  when  the  laud  is  used  for  what  it  is  best 
fitted,  and  that  the  return  is  only  reduced  when  crops 
for  which  the  land  is  not  suited  must  be  cultivated,  on 
account  of  a  demand  for  so  few  articles  of  food  that  a 
proper  rotation  of  crops  is  unprofitable. 

The  cost  of  transportation  is  always  paid  out  of  the 
increased  return  from  production  on  a  large  scale,  and 
hence  does  not  reduce  the  average  return  for  labor. 
Where  people  are  intelligent,  production  on  a  large 
scale  will  never  displace  local  industries,   unless  the 


164  THE  PREMISES   OF  POLITICAL   ECONOMY. 

average  return  for  labor  is  enlarged.  This  increased 
return  arises  from  the  combined  exertion  of  all  the 
laborers.  To  assert  that  this  or  that  portion  of  the 
labor  is  less  productive  than  some  other  is  like  main- 
taining that  the  labor  of  ploughing  or  harrowing  is 
less  productive  than  that  of  reaping  and  threshing. 
Land  must  be  ploughed  and  harrowed,  and  the  crop 
reaped  and  threshed,  in  order  to  secure  a  crop.  It  is 
improper,  therefore,  to  affirm  that  one  portion  of  the 
labor  necessary  to  obtain  the  crop  is  less  profitable 
than  some  other.  For  the  same  reason  it  is  evident 
that  the  labor  on  the  lands  more  distant  from  market 
increases  the  gross  returns  of  industry  just  as  much  as 
those  more  favorably  situated.  So  large  a  scale  of 
production  could  not  be  carried  on  without  the  pro- 
duce of  the  remote  lands.  If  this  produce  were  not 
brought  to  the  centre  of  trade,  the  returns  for  all  labor 
would  be  reduced  more  than  enough  to  pay  for  the 
cost  of  transportation.  Suppose  ten  million  bushels 
of  wheat,  or  its  equivalent  in  other  food,  were  needed 
at  one  place  to  produce  other  desired  commodities  on  a 
large  scale.  This  amount  of  wheat  will  not  be  brought 
to  this  place  unless  the  gain  from  a  large  scale  of 
production  will  more  than  counterbalance  the  loss 
through  an  increased  cost  of  transportation  caused  by 
bringing  more  food  to  one  place.  Under  these  con- 
ditions the  efficiency  of   labor   is   greatest  when  ten 


THE  LAW   OF  DIMINISHING   RETURNS.      1G5 

million  bushels  of  wheat  are  brought  to  one  place  and 
the  nation  divided  into  districts  eacli  producing  ten 
million  bushels. 

If  the  ten  million  bushels  could  be  obtained  nearer 
home  without  an  increase  of  expense,  certainly  the 
average  return  for  labor  would  be  diminished  by  going 
so  far  for  the  food.  The  unused  lands  nearer  home 
have  enough  greater  cost  of  cultivation  to  counter- 
balance the  greater  cost  of  transportation  required  to 
obtain  the  food  from  a  distance,  and  thus  no  gain  can 
be  derived  by  greater  cultivation  of  the  lands  nearer 
home.  The  only  other  alternative  is  a  decrease  of  the 
scale  of  production.  If  the  district  producing  ten 
million  bushels  be  divided  into  ten  districts  producing 
one  million  bushels,  the  cost  of  transportation  will  be 
reduced,  but  the  scale  of  production  must  also  be 
smaller.  The  loss  in  this  way  will  be  greater  than 
the  gain  from  the  reduced  cost  of  transportation,  and, 
as  a  result,  the  average  return  will  be  no  greater  than 
before. 

Suppose  for  a  given  city  that  the  food  having  the 
greatest  cost  of  transportation  is  obtained  from  a  dis- 
trict at  the  cost  of  five  cents  a  bushel,  and  that  within 
the  district  production  on  a  scale  small  enough  to  con- 
sume only  the  produce  of  the  district  could  offer  the 
producers  of  food  ninety  cents  a  bushel.  In  this  case 
ninety-five  cents  a  bushel  must  be  paid  for  all  food  at 


166   THE  PREMISES   OF  POLITICAL   ECONOMY. 

the  city,  and  this  could  not  be  done  unless  the  larger 
scale  of  production  possible  in  the  city  was  productive 
enough  to  enable  laborers  to  pay  five  cents  more  for  food 
than  could  be  paid  by  consumers  in  the  most  distant  dis- 
trict. Unless  aided  by  a  low  rate  of  wages  and  interest 
reducing  both  the  gross  and  average  return  for  labor, 
a  large  scale  of  production  can  displace  a  smaller  one 
only  when  the  increased  productiveness  is  equal  to  the 
greatest  cost  of  transportation.  In  any  district,  if  the 
return  for  labor  is  reduced,  resort  will  be  had  to  the 
smaller  scale  of  production.  If  the  most  distant  dis- 
trict has  the  same  average  return  as  before,  the  nearer 
districts  will  have  a  greater  average  return.  They 
have  a  smaller  cost  of  transportation,  and  hence  the 
average  return  for  all  labor  is  increased  by  the  change 
in  the  scale  of  production  and  the  increase  in  the  cost 
of  transportation.  Free  competition  will  not  distribute 
this  return  equally  to  all  persons,  since  there  will  be  an 
increase  of  rent.  This  does  not  alter  the  fact  that  each 
laborer  was  necessary  for  so  large  a  scale  of  production, 
and  that  the  average  return  for  all  labor  would  be 
reduced,  if  any  portion  of  the  work  remained  unper- 
formed, or  any  workmen  employed  on  any  smaller 
scale  of  production. 

The  diminishing  returns  which  are  claimed  to  at- 
tend the  more  complete  preparation  of  the  soil  for 
crops  by  additional  ploughing,  harrowing,  etc.,  are  not 


THE  LAW  OF  DIMINISHING   RETURNS.      167 

results  of  natural  causes.  Where  land  requires  so 
much  preparation  for  tillage,  either  a  proper  rotation 
of  crops  is  not  carried  through  or  the  cultivators  of 
the  soil  lack  the  capital  necessary  for  better  methods. 
In  new  countries,  when  the  land  is  first  tilled,  a  small 
amount  of  labor  will  prepare  the  soil  as  completely 
as  it  can  be  done,  the  land  being  naturally  porous  and 
mellow.  It  is  only  after  years  of  misuse  that  land 
requires  so  much  labor  as  Mill  indicates  to  render  its 
tillage  most  productive,  and  in  the  mean  time  the  pro- 
ductivity of  the  land  has  rapidly  fallen  off.  When  a 
better  system  of  cultivation  is  introduced,  much  labor 
is  necessary  to  restore  the  original  condition  of  the 
land.  This  restoration,  however,  being  once  accom- 
plished, both  the  return  is  much  increased  and  the 
labor  reduced  beyond  what  it  was  when  the  land  had 
lost  its  fertih'ty  through  misuse. 

The  land  of  a  country  is  in  some  respects  like  a  coal- 
bed,  which  can  be  worked  and  exhausted,  but  it  differs 
from  a  mine  in  that  by  the  use  of  proper  means  its 
productivity  can  be  kept  up.  In  new  countries  farmers 
do  not  care  for  the  land  because  it  is  cheap ;  they  do 
not  cultivate  it,  they  work  it  as  they  would  a  coal-mine. 
Having  exhausted  all  the  natural  fertility  of  one  tract 
they  move  on  to  new  lands,  just  as  when  an  old  mine  is 
exhausted  a  new  one  is  opened.  So  long  as  new  land 
is  accessible  this  system  can  be  pursued,  but  if  the  soil 


168  I'SE  PREMISES  OF  POLITICAL  ECONOMY. 

under  such  a  cultivation  graclnally  loses  its  fertUity  the 
law  of  diminishing  returns  is  not  proved,  even  if  less 
labor  can  for  a  time  produce  greater  returns.  If  Eng- 
lish farmers  cared  not  for  the  future  they  could  pursue 
the  same  method  of  agriculture  that  is  followed  in 
America,  and  for  some  time  obtain  a  much  greater 
proportional  return  at  a  much  less  expenditure  of  labor. 
When,  however,  the  question  is  what  method  of  culti- 
vation will  produce  the  greatest  permanent  return  for 
the  labor  expended,  the  method  ordinarily  pursued  in 
new  countries  must  be  excluded  from  consideration, 
since  under  it  greater  labor  is  required  every  year  to 
produce  the  same  returns,  and  after  a  time  the  land  is 
completely  exhausted. 

If  each  nation  were  completely  cut  off  from  every 
other,  so  that  it  had  to  rely  solely  on  its  own  labor  to 
supply  all  its  wants,  the  small  average  income  of  thinly- 
settled  countries  occupying  only  the  easily  cultivated 
laud  would  be  very  apparent.  It  is  the  possibility  of 
exchange  with  thickly-populated  countries  that  makes 
the  return  for  labor  in  new  countries  seem  so  large 
when  compared  with  other  countries.  The  comparison 
is  not  a  just  one,  for  all  the  manufactories  employing 
cheap  labor  are  in  the  old  countries.  Those  laborers 
in  the  old  countries  who  produce  the  articles  consumed 
in  the  new  countries  should  have  their  incomes  aver- 
aged with  those  living  in  new  countries,  if  a  correct 


THE  LAW    OF  DIMINISHING   RETURNS.      169 

average  of  the  return  for  all  labor  from  the  two  differ- 
ent modes  of  cultivating  land  is  to  be  obtained.  Sup^ 
pose  in  England  the  average  return  of  labor  on  the  land 
be  kept  apart  from  that  of  labor  in  the  cities,  calling 
the  value  of  the  agricultural  produce  the  return  from 
land  and  dividing  this  value  by  the  number  of  laborei-s 
on  the  land,  the  average  return  thus  obtained  would  be 
a  very  high  one,  much  higher  than  the  average  return 
obtained  in  new  countries  from  the  easily-cultivated 
land.  Every  one  will  probably  say  that  this  is  not  a 
fair  way  of  estimating  the  average  returns  of  labor 
in  a  country,  yet  it  is  much  more  just  than  the  ac- 
cepted method  of  comparing  the  average  returns  of 
old  and  new  countries,  the  old  countries  having  not 
only  their  own  non-agricultural  population  counted  in 
making  up  their  average,  but  also  those  laborers  pro- 
ducing for  the  new  countries  with  whom  they  make 
exchanges. 

Suppose  all  the  French  factories  and  their  employes 
be  removed  to  Belgium,  would  not  the  average  income 
of  the  remaining  inhabitants  be  much  higher  than  it 
now  is,  if  we  accept  the  method  now  used  in  obtaining 
the  average  income  of  the  people  in  new  countries? 
It  is  the  fallacy  of  this  method  that  rent  and  agricul- 
tural wages  are  added,  the  sum  then  divided  by  the 
number  of  laborers  employed  on  the  land,  and  the  result 

said  to  be  the  average  return  for  labor.     The  correct 
H  15 


170  ^^^  PREMISES  OF  POLITICAL  ECONOMY. 

method  of  comparing  is  to  take  two  isolated  nations, 
the  one  thinly  and  the  other  tliickly  populated,  or  to 
consider  as  belonging  to  each  nation  such  a  part  of 
the  non-agricultural  population  of  the  whole  civilized 
world  as  would  correspond  to  its  agricultural  produce. 
From  this  or  any  other  correct  method  it  would  be 
readily  seen  that  the  average  return  for  all  labor  in 
newly-settled  countries  is  much  lower  than  the  average 
return  from  those  older  countries  where  much  use  is 
made  of  capital  to  remove  the  obstacles  to  cultivation. 
In  this  case  most  of  the  land  in  the  country  can  be 
tilled,  and  the  advantage  of  a  large  population  is  ob- 
tained along  with  an  increase  of  the  average  return  for 
all  labor. 

Mill,  however,  asserts  that  a  rise  in  price  of  agricul- 
tural produce  is  of  itself  sufficient  evidence  that  the 
average  return  for  labor  has  diminished,  and  in  his 
chapter  on  the  increase  of  production  from  land  he 
says, — 

"  Now  the  most  elementary  truths  of  political  econ- 
omy show  that  this  (the  rise  in  price  of  agricultural 
produce)  could  not  happen,  unless  the  cost  of  produc- 
tion, measured  in  labor,  of  those  products  tended  to 
rise.  If  the  application  of  additional  labor  to  the  land 
was,  as  a  general  rule,  attended  with  an  increase  in  the 
proportional  return,  the  price  of  produce,  instead  of 
rising,  must  necessarily  fall  as  society  advances.  .  .  . 


THE  LAW  OF  DIMINISHING   RETURNS.      171 

If,  therefore,  it  be  true  that  the  tendency  of  agricul- 
tural produce  is  to  rise  in  money  price  as  wealth  and 
population  increase,  there  needs  no  other  evidence  that 
the  labor  required  for  raising  it  from  the  soil  tends  to 
augment  when  a  greater  quantity  is  demanded." 

The  higher  price  of  food  may  indicate  that  there  is 
now  cultivated  a  lower  grade  of  land  than  the  poorest 
formerly  tilled,  but  from  this  it  doas  not  follow  that 
the  averase  return  for  labor  Ls  diminished.     The  aver- 
age  return  for  labor  depends  not  on  the  labor  needed 
to  produce  the  most  costly  portion  of  the  produce,  but 
on  the  relative  quantity  of  the  most  costly  and  the  less 
expensive  portions.    Suppose  that  there  are  four  grades 
of  land  yielding  for  an  equal  amount  of  labor  twenty, 
eighteen,  sixteen,  and  fourteen  bushels  of  wheat  to  the 
acre,  and  that  the  acres  of  each  grade  were  double  the 
number  of  those  of  the    next    lower  grade,  and  that 
while  population  was  increasing  enough  to  demand  the 
cultivation  of  each  lower  grade  sufficient  improvements 
were  made  so  that  the  same  labor  on  each  grade  of  land 
could  raise  one  more  bushel  to  the  acre.     When  only 
lands  of  the  first  class  were   cultivated  the  average 
return  would  be  twenty  bushels  to  the  acre,  and  the 
price  would  be  fixed  by  its  cost  of  production.      As 
soon,  however,  as  population  had  increased    so  as  to 
demand  the  cultivation  of  the  second  grade  of  land, 
the  improvements  would  cause  tliis  land  to  yield  nine- 


]72  I'^E   PREMISES   OF  POLITICAL   ECONOMY. 

teen  bushels,  and  the  best  land  would  yield  twenty-one 
bushels  to  the  acre.     If  the  acres  of  the  first  class  are 
double  the  number  of   the  second  class,  the  average 
produce  of  all  the  land  will  be  twenty  and  one-third 
bushels  to  the  acre,  an  increase  in  the  average  return, 
yet  the  price  will  be  higher  than  before,  since  the  cost 
of  production  is  determined  by  laud  yielding  nineteen 
bushels  to  the  acre  instead  of  twenty  bushels  as  before. 
When  land  of  the  third  grade  is  cultivated  under  the 
above  conditions,  the  price  will  be  fixed  by  land  yield- 
ing eighteen  bushels  to   the  acre,  while  the  average 
return  will  be  twenty  and  six-sevenths  bushels  to  the 
acre;  and  when  the  fourth  grade  of  land  is  cultivated 
the   poorest  land  in   cultivation  will  yield   seventeen 
bushels  to  the  acre,  Avhile  the  average  return  will  be 
increased  to  twenty-one  and  eight-fifteenths  bushels  to 
the  acre.     This   illustration   shows   that   the  average 
return  for  labor  can  increase  along  with  an  increase  of 
the  price  of  food,  and  that  some  other  evidence  than 
the  rise  in  value  of  agricultural  produce  is  needed  to 
prove  that  the  average  return  for   labor   has  dimin- 
ished.    This  fact  might  be  illustrated  in  other  ways, 
but  these  figures  bring  out  the  point  needing  expla- 
nation, that  the  average  return  for  labor  does  not  de- 
pend on  the  cost  of  production  on  the  poorest  land 
in  use,  but  on  the  relative  quantity  of  the  land  of 
the  various  grades,  and  that  an  increase  of  the  cost  of 


THE  LAW  OF  DIMINISHING   RETURNS.      173 

production  on  some  of  the  laud  does  not,  as  claimed 
by'Mill,  counteract  the  beneficial  effect  of  all  improve- 
ments. 

Mill's  assertion  that  the  cultivation  of  inferior  land 
is  in  habitual  antagonism  to  the  progress  of  civilization, 
can  only  be  maintained  by  showing  that  the  tillage  of 
the  inferior  lands  reduces  the  ratio  of  the  superior  land 
to  the  inferior.  The  progress  of  civilization  causes  much 
of  the  poor  land  to  become  good  not  only  through  the 
increased  use  of  capital  and  skill,  but  also  through  the 
gradual  change  in  the  demand  for  food,  allowing  those 
crops  to  be  raised  for  which  the  land  is  best  fitted. 
There  are  two  opposing  tendencies,  the  one  causing  in- 
ferior land  to  be  cultivated,  the  other  chano-ino-  the  infe- 
rior  lands  into  good  lands.  The  supply  of  inferior  lands 
is  limited,  since  there  is  a  definite  quantity  of  land,  and 
also  an  ultimate  limit  to  the  productivity  of  each  acre, 
the  plants  needing  space  and  air  in  which  to  thrive. 
For  these  reasons  the  quantity  of  inferior  land  brought 
into  cultivation  must  gradually  decrease  with  the  prog- 
ress of  civilization,  and  finally  become  exhausted.  On 
the  other  hand,  improvements  are  being  made  by  which 
poor  land  is  rapidly  changed  into  good  land,  and 
there  is  no  reason  why  most  of  it  should  not  become 
good  land,  if  the  demand  for  food  is  so  altered  as  to 
allow  the  best  use  of  all  land.     In  this  way  the  ratio 

of  the  good  to  the  poor  land  is  gradually  increased,  and 

15* 


174  THE  PREMISES   OF  POLITICAL  ECONOMY. 

whatever  increases  this  ratio  enlarges  the  average  return 
for  labor. 

All  cultivated  land  may  become  good  land,  even  if 
some  land  cannot  be  improved.  The  largest  gross  re- 
turn is  not  obtained  when  all  the  land  of  a  country  is 
tilled.  Forests  are  necessary  to  secure  a  proper  supply 
of  rain.  If  the  amount  of  unimprovable  land  is  not 
greater  than  what  is  needed  for  this  purpose,  it  should 
be  thus  used,  and  all  the  remaining  land  can  then  be 
made  good  land.  When  this  result  is  brought  about, 
there  will  be  no  antagonism  between  the  use  of  inferior 
land  and  the  progress  of  civilization.  The  greatest 
gross  return  will  then  be  obtained  along  with  the 
highest  average  return  for  labor.  As  there  will  be 
little  or  no  difference  in  the  fertility  of  land,  the  price 
of  food  will  be  so  low  that  rent  will  no  longer  be  an 
important  factor  in  the  distribution  of  wealth. 

The  fact  that  the  supply  of  poor  land  is  so  large 
that  all  of  it  cannot  be  used  with  profit  for  forests  and 
other  purposes  not  requiring  cultivation,  does  not  of 
itself  establish  the  law  of  diminishing  returns.  Poor 
land  can  be  cultivated  only  when  the  price  of  food  is 
high,  and  the  increase  in  the  price  of  food  will  raise 
rent  and  lower  wages.  Whatever  reduces  wages  will 
diminish  the  efficiency  of  labor,  and  if  the  poor  land 
is  cultivated,  a  less  efficient  class  of  laborers  must  be 
employed  than  if  only  good  land  were  tilled.     The 


THE  LAW  OF  DIMINISHING   RETURNS.      I75 

use  of  cheap  labor  on  the  good  land  will  reduce  its  fer- 
tility, and  unless  the  amount  of  the  produce  on  the 
poor  land  is  greater  than  the  amount  lost  by  decreased 
efficiency  of  labor  on  the  good  land,  the  result  of  an 
effort  to  increase  the  means  of  subsistence  by  the  use 
of  the  poor  land  and  cheap  labor  will  be  a  decrease 
instead  of  an  increase  of  the  food-supply. 

Just  as  the  necessity  of  forests  to  secure  a  proper 
rainfall  shows  that  the  greatest  amount  of  food  is  ob- 
tainable when  all  the  land  of  a  country  is  not  culti- 
vated, so  the  necessity  of  high  wages  to  secure  efficient 
labor  shows  that  there  must  be  many  apparent  oppor- 
tunities to  increase  the  food-supply  by  means  of  cheap 
labor,  which  cannot  be  utilized  without  such  a  reduction 
of  the  intelligence  and  efficiency  of  labor  as  would 
more  than  counterbalance  the  gain  obtained  by  the  use 
of  cheap  labor. 

The  view  of  nature  held  by  the  adherents  to  the  law 
of  diminishing  returns  may  be  well  represented  by  an 
apple-orchard,  in  which  all  the  labor  required  is  that 
of  gathering  the  fruit.  Some  trees  will  bear  more  and 
better  apples  than  others,  and  so  long  as  these  only  are 
needed  to  supply  the  demand  for  apples,  the  return  for 
labor  will  be  high ;  but  when  more  apples  are  needed, 
the  reward  for  labor  will  be  less,  and  will  be  continu- 
ally reduced  as  greater  and  greater  quantities  of  apples 
are  required.     As  any  one  can  pick  apples,  the  sup])ly 


176   I'HE  PREMISES  OF  POLITICAL   ECONOMY. 

will  be  increased  as  the  reward  for  labor  decreases  and 
more  of  the  trees  are  used  to  supply  the  demand.  As 
all  the  work  that  can  be  done  by  dear  labor  can  be 
performed  by  cheap  labor,  while  some  work  that  dear 
labor  cannot  perform  can  be  done  by  cheap  labor,  the 
use  of  cheap  labor  in  this  case  increases  the  aggregate' 
return  for  labor,  but  lessens  the  average  return. 

If  all  kinds  of  work  were  like  apple-picking, — the, 
sort  of  labor  which  men  performed  in  the  original 
social  state  before  capital  and  skill  were  employed, — 
the  law  of  diminishing  returns  would  doubtless  be  true. 
Fortunately  for  mankind,  there  are  much  easier  ways 
of  procuring  food.  There  can  be  no  doubt  that  by 
the  use  of  capital  and  skill  a  greater  population  can  be 
supported,  and  also  with  a  greater  average  return  for 
labor,  than  is  possible  in  the  primal  social  state.  The 
question  where  the  greater  gross  and  average  return 
would  be  found,  can  arise  only  when  we  compare  the 
present  social  state,  where  the  few  are  skilful  and  fur- 
nish capital  for  the  many,  who  remain  ignorant  and 
unskilled,  with  a  more  advanced  state  of  society  where 
each  laborer  is  skilful  and  saves  for  himself.  In  con- 
sidering the  gross  produce  of  these  two  social  states, 
those  living  in  the  advanced  state  would  be  debarred 
from  all  opportunities  to  labor  where  the  return  was 
small,  while  those  living  in  the  present  social  state 
would  lose  where  the  return  was  high,  inefficient  labor 


THE   LAW  OF  DIMINISHING    RETURNS.      17 J 

not  producing  as  much  as  the  skilled  but  dearer  labor 
which  might  be  employed  wherever  the  return  for 
labor  was  sufficient  to  remunerate  it.  Which  of  the 
two  social  states  could  produce  the  greater  gross  return 
would  depend  upon  the  relation  of  the  good  lands  to 
the  poor.  If  most  of  the  land  is  or  can  be  made  good, 
the  skilled  laborers  of  the  more  advanced  state  of  so- 
ciety could  produce  a  greater  gross  return  than  cheap 
labor  and  still  obtain  a  high  reward  for  their  labor. 
On  the  other  hand,  most  of  the  land  being  poor,  cheap 
labor  would  have  a  field  of  employment  so  large  that 
it  could  produce  a  greater  gross  return  than  skilled 
labor,  even  if  it  were  less  efficient,  on  the  few  good 
acres  which  society  possesses. 

To  illustrate,  let  us  suppose  that  in  a  given  country 
one  million  men  can  be  employed  in  cultivating  the 
land,  each  man  producing  two  hundred  bushels  of 
wheat,  while  on  the  land  not  tilled  each  man  could 
produce  but  one  hundred  bushels;  and,  further,  that 
if  the  wages  of  the  laborers  were  reduced  one-half, 
so  that  the  inferior  land  might  be  cultivated,  their 
efficiency  would  be  reduced  ten  per  cent.  If  this  be 
true,  the  effect  of  the  cultivation  of  the  inferior  lands 
on  the  gross  return  would  depend  upon  the  quantity  of 
the  inferior  land.  The  reduction  of  the  wages  of  the 
laborers  employed  on  the  superior  land  would  accord- 
ing to  this  supposition   lessen   the  return   from   their 

TO 


178   THE  PREMISES   OF  POLITICAL   ECONOMY. 

labor  ten  per  cent.,  or  from  two  hundred  million  to 
one  hundred  and  eighty  million.  If  the  quantity  of 
the  inferior  land  were  sufficient  to  employ  two  hundred 
thousand  men,  they  would  produce,  at  one  hundred 
bushels  each,  twenty  million  bushels,  and  the  gross 
produce  of  all  the  land  would  be  just  equal  to  what 
the  superior  lands  alone  produced  before  the  inferior 
land  was  tilled.  Were  the  quantity  of  inferior  land 
smaller,  so  that  only  one  hundred  thousand  men  could 
be  employed  on  it,  they  would  produce  but  ten  mil- 
lion bushels,  and  the  gross  return  would  be  lowered 
to  one  hundred  and  ninety  million  bushels,  a  loss  of 
ten  million  bushels.  On  the  other  hand,  if  three 
hundred  thousand  men  could  find  work  on  the  inferior 
land,  they  would  produce  thirty  million  bushels,  and 
tlie  gross  return  would  be  increased  by  ten  million 
bushels. 

From  this  illustration  it  is  evident  that  the  quanti- 
tative relation  of  inferior  to  superior  lands  determines 
whetlier  or  not  the  gross  return  will  be  increased  by 
the  cultivation  of  both.  If  the  quantity  of  inferior 
lands  be  relatively  large,  their  cultivation  will  increase 
the  gross  return  and  lower  the  average  return.  When, 
however,  iho.  quantity  of  inferior  lands  is  relatively 
small,  their  tillage  will  reduce  both  the  gross  and 
average  return  for  labor. 

It  has  been  shown  in  the  previous  discussion  that  in 


THE  LAW  OF  DIMINISHING   RETURNS.      I79 

a  society  in  which  all  are  skilled  and  possess  capital, 
most  of  the  land  becomes  good  land.  If  this  be  true 
in  such  a  society,  both  the  gross  and  average  returns  are 
much  greater  than  in  the  present  social  state  where  so 
much  use  is  made  of  .cheap  labor. 

The  alternatives  between  which  a  society  must  choose 
are  less  labor  and  a  greater  gross  and  average  return 
on  the  one  hand,  and  more  labor  and  a  smaller  gross 
and  average  return  on  the  other.  The  third  alterna- 
tive which  the  law  of  diminishing  returns  implies — a 
greater  gross  and  a  less  average  return — is  an  impossi- 
bility where  the  greater  part  of  the  laud  of  a  country 
is  good.  It  overlooks  the  necessity  of  high  wages  and 
high  interest  to  induce  all  to  save  and  become  skilful, 
the  gross  return  being  lessened  unless  all  do  this. 

The  effect  of  social  progress  in  increasing  both  the 
gross  and  average  returns  may  be  represented  by  sup- 
posing a  series  of  islands  of  equal  size  arranged  in  a 
line  north  and  south,  each  island  being  more  fertile  and 
productive  than  its  northern  neighbor.  The  islands 
lying  to  the  south  would  support  a  greater  population 
and  with  a  greater  average  return  than  those  to  the 
north,  more  food  being  raised  and  at  less  proportional 
cost.  If  only  the  one  farthest  north  were  inhabited 
and  the  rest  unknown,  population  would  increase  there 
until  it  would  be  so  great  that  the  average  return  to 
labor  would  be  lessened.      Suppose  at  this  juncture 


180   '^HE  PREMISES  OF  POLITICAL   ECONOMY. 

that  the  island  next  south  is  discovered,  and  that  the 
inhabitants  of  the  first  island,  rather  than  have  their 
incomes  reduced,  remove  bodily  to  the  new  island, 
which  can  support  a  larger  population  and  give  a 
greater  average  return  to  their  labor.  The  population 
still  increasing,  finally  becomes  so  great  that  the  aver- 
age return  again  begins  to  decline.  Then  let  the  third 
island  be  discovered  and  all  the  people  transfer  them- 
selves to  it,  thereby  more  than  regaining  the  old  aver- 
age return  for  their  labor.  So  long  as  new  islands 
can  be  discovered,  this  process  can  be  repeated,  and  at 
each  removal  both  the  number  of  the  population  and 
their  average  income  would  be  augmented.  To  make 
this  illustration  applicable  to  our  purpose  we  must 
further  suppose  that  to  the  occupancy  of  each  island 
the  condition  is  attached  that  if  the  inhabitants  allow 
a  reduction  in  the  average  return  to  their  labor,  they 
must  leave  the  island  and  return  to  the  one  whence 
they  came.  In  this  case  all  those  resources  which 
allow  an  increase  of  population,  but  require  a  decrease 
of  the  average  return,  could  not  be  utilized,  and  when, 
on  each  island,  population  is  increased  to  the  point 
where  the  average  return  begins  to  decline,  the  increase 
must  be  stopped,  a  new  island  discovered,  or  the  people 
must  return  to  the  island  to  the  north,  where  both  the 
population  and  the  average  produce  of  labor  have  been 
reduced. 


THE  LAW  OF  DIMINISHING   RETURNS.      181 

Granting  these  suppositions,  a  greater  population 
would  always  be  in  conjunction  with  a  greater  average 
return.  There  would  be  but  one  island  in  the  series 
where  people  of  a  given  average  income  could  live, 
and  if  the  incomes  of  these  people  were  less  than  that 
of  the  people  of  another  island,  the  population  would 
also  be  less. 

I  contend  that  there  are  such  conditions  offered  by  the 
different  social  states  through  which  each  progressive 
society  passes.  If  a  greater  population  is  supported, 
the  average  income  is  increased,  and  if  the  income  is 
lowered,  society  finds  itself  forced  back  into  a  lower 
social  state,  where  its  numbers  are  also  reduced.  Each 
new  social  state  imposes  some  new  condition,  which  can 
only  be  complied  with  so  long  as  the  average  return  is 
greater  than  before.  The  people  must  gradually  learn 
to  work  regularly,  cease  to  wage  war,  respect  property, 
accumulate  capital,  demand  for  food  what  nature  is  best 
fitted  to  supply;  and,  lastly,  they  must  be  intelligent 
and  skilled  workmen,  each  saving  for  himself.  As 
these  conditions  are  complied  with,  both  population 
and  the  average  return  are  increased ;  if  they  are  vio- 
lated, both  the  population  and  the  average  return  are 
reduced.  This  is  especially  true  of  the  last  condition, 
as  a  person  will  acquire  skill  and  save  only  as  he  can 
thereby  better  his  condition.     A  society  all  of  whose 

members  are  skilled,  each  one  saving  for  himself,  can 

16 


182  THE  PREMISES   OF  POLITICAL  ECONOMY. 

support  a  larger  population  than  any  other  and  at  a 
greater  average  income.  If  this  high  return  for  labor 
is  not  maintained,  skill  will  be  lost  and  capital  de- 
creased, and  only  a  smaller  population  will  be  able  to 
find  support,  and  at  a  lower  rate  of  return  for  labor. 

If  the  foregoing  facts  are  brought  into  their  proper 
relation,  they  will  demonstrate  the  correctness  of  the 
position  that  the  law  of  agricultural  returns  is  a  law  of 
limited  not  of  diminishing  returns.  Up  to  a  certain 
point,  depending  on  the  knowledge  and  skill  of  the 
inhabitants,  the  return  increases  in  proportion  to  the 
labor  expended ;  beyond  that  point  no  return  can  be 
had  without  an  increase  of  knowledge  and  capital,  or 
without  a  change  in  the  demand  for  food,  by  which 
the  qualities  of  the  land  are  brought  into  better  use. 

It  is  only  during  an  early  stage  of  civilization  that 
the  law  of  diminishing  returns  is  true.  Then  but  small 
use  is  made  of  skill  and  capital,  and  there  is  a  demand 
only  for  a  few  articles  of  food.  To  a  nation  that 
relies  solely  on  manual  labor  to  supply  its  wants,  only 
the  easily  cultivated  land  has  a  small  cost  of  produc- 
tion, and  as  population  increases  soils  must  be  culti- 
vated that  are  less  productive  of  the  few  articles  of  food 
which  are  in  demand.  Only  a  small  proportion  of  the 
land  is  good  land,  and  hence  the  increase  of  popula- 
tion is  detrimental  to  the  average  return  for  labor. 
With  the  progress  of  civilization  the  ratio  of  the  good 


THE  LA  W  OF  DIMINISHING   RETURNS.      183 

laud  to  the  poor  is  increased,  and  the  disadvantage  of 
an  increasing  population  is  gradually  diminished,  until 
at  length  the  ratio  of  the  good  to  the  poor  laud  is  so 
great  that  the  advantages  of  a  large  population  more 
than  counterbalance  the  disadvantages.  When,  finally, 
each  man  becomes  skilled  and  saves  for  himself,  and  all 
persons  so  adjust  their  demands  for  food  to  the  natural 
conditions  by  which  they  are  surrounded  that  all  the 
land  may  be  used  for  what  it  is  best  fitted,  the  average 
return  for  labor  will  increase  with  the  growth  of  pop- 
ulation, and  the  greatest  possible  population  can  be 
supported  with  a  much  larger  average  return  for  labor 
than  can  be  obtained  when  the  number  of  people  is 
more  limited. 


CHAPTER    VII. 


FEEE-TRADE. 


In  the  previous  chapters  we  have  already  considered 
the  leading  principle  by  which  the  advantages  of  free- 
trade  between  different  nations  must  be  determined. 
It  has  been  shown  that  a  combination  of  cheap  labor 
and  low  interest  will  produce  an  approximation  of  the 
values  of  food  and  raw  material  to  that  of  manufac- 
tured commodities.  The  power  of  underselling  arises 
from  a  false  economy  of  skilled  labor;  as  cheap  labor 
gradually  displaces  the  skilled,  the  price  of  finished 
articles  falls  and  that  of  food  and  raw  material  is 
increased.  If  cheap  labor  and  low  interest  in  domestic 
commerce  produce  an  approximation  of  prices,  dis- 
placing skilled  labor,  the  same  result  will  be  brought 
about  by  free  foreign  exchange,  and  manufactured 
commodities  will  be  produced  by  the  nation  which, 
having  the  lowest  rate  of  wages  and  interest,  can  create 
the  greatest  approximation  of  the  price  of  food  to  that 
of  finished  commodities. 

There  are  good  reasons  for  regarding  this  the  most 
important   principle   determining   the   advantages   of 

foreign  exchange.     It  is  true  that  there  are  great  va- 

184 


FREE-TRADE.  Ig5 

ri'cties  of  soil  and  climate  throughout  the  earth,  each 
peculiarly  fitted  for  some  particular  products,  yet  the 
demand  for  food  is  practically  limited  to  a  few  articles, 
and  if  a  nation  wishes  to  exchange  any  considerable 
amount  of  produce  with  other  nations,  these  articles 
must  be  exported,  no  matter  how  much  advantage  it 
may  have  in  other  articles.  Take  the  trade  of  Eng- 
land and  India  for  example.  India,  doubtless,  has 
important  advantages  over  England  in  the  production 
of  rice  and  other  tropical  articles  of  food.  The  de- 
mand for  food  of  this  nature  in  England  is  very  lim- 
ited, as  the  main  articles  of  English  diet  are  wheat- 
bread  and  beef,  and  if  India  wants  English  commodities 
to  any  extent,  wheat  or  beef  must  be  sent  in  exchange. 
As  a  result  we  see  the  land  of  India  used  to  produce 
wheat  to  send  to  England  instead  of  rice,  the  article 
for  which  the  land  is  particularly  adapted,  so  that 
the  productive  power  of  India  is  reduced  to  but  a 
small  fraction  of  what  it  would  otherwise  be.  As 
another  example  take  the  case  of  Ireland.  It  is  well 
known  that  the  land  of  Ireland  is  extremely  well  fitted 
for  potatoes,  yet  as  the  demand  for  food  in  England  is 
not  for  potatoes,  but  for  beef,  the  land  of  Ireland  must 
be  used  for  grazing  purposes,  and  the  country  is  thereby 
almost  depopulated.  So  long  as  the  English  demand 
only  wheat  and  beef  the  land  of  every  nation  trading 
with  them  must  be  used  for  raising  wheat  and  cattle,  no 

16* 


186   THE  PREMISES  OF  POLITICAL  ECONOMY. 

matter  what  may  be  the  advantages  which  they  possess 
for  producing  other  articles  of  food.  The  fact  which  I 
wish  to  bring  into  prominence  is  not  that  exchange 
with  England  is  disadvantageous,  but  that  foreign 
trade  is  of  little  importance  to  any  nation  so  long  as 
the  demand  for  food  is  limited  to  a  few  articles.  Of 
what  utility  is  it  to  one  nation  that  its  land  will  pro- 
duce excellent  rye,  potatoes,  rice,  and  other  similar 
products  so  long  as  the  nations  with  which  it  trades 
have  little  or  no  demand  for  them  ?  If  the  list  of  im- 
ports of  any  civilized  nation  be  examined,  it  will  be 
seen  that  nine-tenths,  or  more,  of  all  the  imports  are 
manufactured  commodities  and  a  few  articles  for  food 
and  clothing  which  can  be  produced  anywhere.  Sugar, 
tobacco,  and  cotton  are  the  only  articles  from  semi- 
tropical  regions  which  are  desired  in  any  considerable 
quantities,  and  if  more  lands  in  these  regions  are  culti- 
vated than  will  supply  the  very  limited  demand  for 
these  articles,  crops  better  fitted  to  temperate  climates 
must  be  produced. 

Certainly  the  waste  of  labor  is  as  great  when  plants 
best  fitted  for  the  temperate  zone  are  produced  in  the 
tropical  zone  as  when  tropical  plants  are  raised  in  tem- 
perate regions.  An  orange  can,  it  is  said,  be  produced 
in  Portugal  with  half  the  labor  that  is  required  in 
France,  and  when  the  French  exclude  the  oranges 
from  Portugal  they  double  the  amount  of  labor  which 


FREE-TRADE.  187 

would  otherwise  be  needed  to  procure  an  orange.  That 
tliis  is  true  I  have  no  desire  to  deny,  but  it  is  easy  to 
show  that  a  free-trade  policy  also  causes  a  like  waste  of 
labor  and  to  a  much  greater  extent.  Suppose  the  de- 
mand for  more  oranges  were  so  great  that  in  Portugal 
and  elsewhere  the  land  best  fitted  for  oranges  could 
not  supply  the  demand,  and  the  price  of  oranges 
rose  so  high  that  they  could  be  raised  with  profit  in 
France.  The  land  in  France  would  be  used  for 
orange-groves  only  when  all  the  various  grades  of 
laud,  from  the  best  of  Portugal  to  the  French  land 
most  productive  of  oranges,  have  been  diverted  from 
their  most  productive  use  and  devoted  to  the  produc- 
tion of  oranges.  Now  the  objection  urged  by  free- 
traders against  a  duty  on  oranges  is  that  the  labor 
employed  in  orange-groves  would  be  diverted  from 
the  other  industries,  where  it  is  most  productive.  An 
undue  demand  for  oranges  would  have  the  same  effect. 
Wlien  the  price  of  oranges  is  high,  most  of  the  land 
producing  them  is  more  productive  of  other  ai'ticles  of 
food.  The  very  same  fields  of  France  whose  use  for 
orange-groves  caused  so  much  complaint  on  the  part 
of  the  free-traders  when  the  tariff  raised  the  price  of 
oranges,  are  now  used  for  their  production.  The 
greater  demand  for  oranges  certainly  does  not  increase 
the  fitness  of  French  soil  for  orange-groves.  If  there 
is  a  reduced  return  for  labor  wheii  a  tariff  causes  the 


188   '^^E  PREMISES   OF  POLITICAL   ECONOMY. 

land  of  France  to  be  used  to  produce  oranges,  there  is 
a  still  greater  reduction  of  the  efficiency  of  labor  when 
this  result  is  brought  about  by  the  increase  of  the  de- 
mand for  oranges.  The  increased  demand  will  cause 
not  only  the  land  of  France  to  be  used  for  a  purpose 
for  which  it  is  poorly  fitted,  but  also  large  tracts  of 
land  in  other  countries  less  productive  of  oranges  than 
the  land  of  Portugal  would  be  turned  into  orange- 
groves. 

If  an  examination  be  made  to  discover  how  much 
land  is  diverted  from  its  best  use  by  a  free-trade 
policy,  it  will  be  seen  that  the  waste  of  labor  which  it 
causes  greatly  exceeds  that  resulting  from  an  opposite 
policy.  When  a  French  tariff  causes  a  few  acres  in 
France  to  be  used  for  the  production  of  oranges  a  great 
outcry  is  raised  at  the  waste  of  labor,  but  when  free- 
trade  causes  the  land  of  India  to  be  used  for  the  pro- 
duction of  wheat,  no  free-trader  notices  the  waste  of 
labor.  Yet  in  this  manner  the  productivity  of  the 
land  of  India  is  more  reduced  than  is  the  land  of 
France  when  used  for  orange-groves.  A  free-trade 
policy  causes  the  land  of  the  whole  world  to  be  used 
for  the  production  of  a  few  articles  like  wheat,  and  of 
no  few  articles  will  land  yield  as  much  as  if  all  that 
variety  of  food  were  desired  which  would  cause  each 
acre  to  be  used  most  efficiently. 

There  are   several   good   reasons  why  a  free-trade 


FREE-TRADE.  189 

policy  will  divert  the  laud  of  exchanging  countries 
from  its  best  use.  Most  articles  of  food  have  great 
bulk  and  weight.  When  they  are  carried  to  a  great 
distance,  the  cost  of  transportation  is  so  great  that 
they  become  more  costly  to  the  consumers  in  distant 
lands  than  are  the  other  articles  of  food,  which, 
though  supplied  by  nature  less  abundantly,  can  be 
transported  with  but  little  expense.  Many  articles 
of  food  cannot  be  preserved,  and  must  be  consumed 
at  the  place  where  they  are  produced.  They  can  be 
utilized  only  by  a  people  living  where  they  are  abun- 
dant, and  are  of  no  more  use  to  distant  lands  than  are 
the  mines  of  an  uninhabited  country.  If  fruits  and 
other  perishable  commodities  could  be  as  easily  pre- 
served and  transported  as  wheat  can  be,  the  whole 
economic  history  of  the  world  would  have  been  very 
different  from  what  it  has  been.  The  food  of  every 
nation  would  be  other  than  it  is,  while  the  advantages 
of  free-traders  would  be  greatly  increased.  It  is,  how- 
ever, of  no  importance  to  the  world  that  there  are 
many  kinds  of  food  in  other  climates  so  long  as  the 
cost  of  transporting  them  is  more  of  a  hinderance  to 
obtaining  them  than  the  worst  tariff  would  be.  Even 
of  the  articles  of  food  that  can  be  transported,  some  can 
endure  transportation  better  than  others.  Corn,  for 
example,  is  much  more  liable  to  damage  than  wheat, 
and  hence  for  cities  distant  from  the  centres  of  produo- 


190  THE  PREMISES   OF  POLITICAL   ECONOMY. 

tion  wheat  will  be  less  costly  as  a  means  of  support 
than  corn,  the  reverse  of  what  is  true  in  an  adjacent 
market.  In  this  way  a  foreign  demand,  offering  a 
premium  for  the  production  of  those  articles  of  food 
best  fitted  for  transportation,  diverts  land  from  its 
best  use,  and  by  reducing  the  efficiency  of  labor,  pro- 
duces that  very  result  against  which  free-traders  so 
strenuously  object  when  it  is  occasioned  by  a  protective 
tariff. 

The  most  important  misuse  of  land,  however,  arises 
from  the  habits  of  that  class  of  laborers  which  survive 
when  a  nation  steadily  adheres  to  a  free-trade  policy. 
Only  by  an  extended  use  of  production  on  a  large  scale, 
accompanied  by  cheap  labor  and  low  interest,  can  so 
great  an  approximation  of  prices  be  brought  about  in 
one  nation  as  to  displace  the  industrial  classes  in  other 
nations  where  the  habits  of  the  laborers  are  of  such  a 
nature  that  they  are  inclined  to  save  for  themselves. 
To  produce  a  great  approximation  of  prices  there  must 
be  on  the  part  of  most  laborers  a  demand  for  those 
articles  of  food  and  drink  which  create  in  the  con- 
sumers the  strongest  appetite  and  the  greatest  desire  for 
consumption  of  food  as  a  source  of  pleasure.  By  their 
use  the  thought  of  future  welfare  is  displaced  by  the 
desire  for  immediate  enjoyment,  and  the  cravings  of  an 
abnormal  appetite  lead  its  possessor  to  work  for  less 
wages  than  will  those  who  desire  less  exclusive  pleas- 


FREE-  TRA  DE.  191 

ures.  If  soup  or  coffee  created  a  stronger  appetite  than 
beer  or  whiskey,  and  rye-bread  and  rice  were  more 
palatable  than  wheat-bread  and  meat,  the  industrial 
centres  of  the  world  would  be  differently  located  from 
where  they  now  are,  and  the  land  of  every  country 
would  be  used  for  producing  a  very  different  class  of 
articles  of  food.  As  it  now  is,  the  stimulating  food 
and  drink  demanded  by  a  low  class  of  laborers  cause 
most  of  the  land  to  be  used  for  what  it  is  poorly 
fitted,  and  free-trade,  by  assisting  the  survival  of  those 
laborers  having  the  strongest  appetites,  reduces  the 
efficiency  of  labor  more  than  could  be  done  even  by  a 
prohibitory  tariff,  which  cuts  off  each  nation  from  the 
advantages  of  soil  and  climate  possessed  by  other 
nations. 

When  a  much  higher  civilization  has  displaced  the 
present,  and  the  nations  of  the  earth,  using  a^  much 
more  varied  and  less  stimulating  diet,  conform  to  the 
natural  conditions  by  which  they  are  surrounded, 
foreign  exchange  will  be  of  great  importance  to  them. 
So  long,  however,  as  the  demand  for  food  is  limited  to 
a  few  articles,  differences  of  soil  and  climate  are  of 
little  moment.  The  controlling  circumstances  in 
foreign  as  well  as  domestic  exchange  are  the  rates  of 
wages  and  interest.  Just  as  in  domestic  trade  the  class 
offering  the  highest  price  for  food  survive,  so  in  foreign 
trade  one  nation  can  displace  the  producers  of  raanu- 


192  'J'HE  PREMISES   OF  POLITICAL   ECONOMY. 

factured  commodities  in  other  nations  by  causing  so 
great  an  approximation  of  the  price  of  food  to  fin- 
ished commodities  that  it  will  be  more  profitable  for 
producers  of  food  in  other  nations  to  exchange  with  it 
than  with  home  producers.  As,  however,  the  advo- 
cates of  free-trade  deny  this  fact  and  claim  that  free- 
trade  is  always  advantageous  to  both  exchanging 
nations,  it  is  necessary  to  examine  the  arguments  by 
which  they  seek  to  establish  their  position. 

One  of  Adam  Smith's  favorite  arguments  is  that  it 
is  good  policy  in  a  family  to  sell  in  the  dearest  and 
buy  in  the  cheapest  market,  and  that  what  is  good 
policy  for  a  family  cannot  be  a  poor  policy  for  a  nation. 
In  this  argument  he  overlooks  the  important  difference 
between  a  family  and  a  nation.  In  a  family  the  dis- 
tribution is  or  ought  to  be  according  to  the  needs  of 
the  different  members,  or  according  to  the  part  taken 
by  each  in  production.  In  a  nation  this  is  not  the  case. 
Each  class  has  its  own  interests  and  desires,  and  looks 
out  for  them  alone,  and  is  perfectly  willing  to  sacrifice 
the  interests  of  others  to  its  own  welfare.  If  rent  rises 
and  wages  and  interest  fall,  landlords  do  not  share  their 
extra  gains  with  the  other  classes,  nor  do  either  of  the 
other  classes  relinquish  a  profit  or  share  it  with  the 
others.  Nations  are  not  families,  at  least  nations  where 
competition  exists.  Adam  Smith's  argument  would 
hold  good  in  a  commune  where  the  share  of  each  per- 


FREE-TRADE.  193 

Bon  was  given  according  to  any  plan  which  allowed 
none  to  be  merely  landlord,  capitalist,  or  laborer,  the 
division  of  produce  taking  place,  as  it  does  in  a  family, 
according  to  some  maxim  of  justice. 

Free  competition  spoils  all  this,  and  compels  the 
people  of  nations  to  act  in  a  way  different  from  that 
they  would  follow  if  they  were  a  family  or  commune; 
and  nothing  can  be  known  of  the  effect  of  a  measure 
until  it  is  determined  what  effect  it  will  have  on  the 
distribution  of  wealth. 

When  one  of  the  exchanged  products  is  an  article  of 
food  or  a  product  of  mines,  the  exchange  becomes  dis- 
advantageous to  the  country  exporting  this  produce, 
since  the  additional  quantity  needed  for  export  can 
under  present  conditions  be  obtained  only  at  an  in- 
creased proportional  cost,  and  the  gain  in  the  ex- 
change will  be  counteracted  by  the  increased  cost  at 
which  the  additional  supply  is  produced. 

The  capitalists  and  laborers  lose  not  only  on  the 

amount  exported,  but  on  all  produce,  as  there  is  only 

one  price  for  an  article  in  the  same  market,  and  hence 

the  demand  for  export  raises  the  price  not  only  of  the 

part  sent  abroad  but  of  all  that  consumed  at  home. 

Since  only  a  small  part  is  ever  sent  abroad,  the  gains 

of  the  landlords  from  this  part  are  only  a  small  fraction 

of  the  gains  which  the  increase  in  price  enables  them 

to  obtain  from  the  capitalists  and  laborers,  who  are 
I       »  17 


194  THE  PREMISES  OF  POLITICAL   ECONOMY. 

compelled  to  purchase  all  their  food  at  the  augmented 
price. 

It  may  be  objected  that  if  the  nation  as  a  whole  lose 
more  than  it  gains  the  exchange  would  not  take  place. 
This  would  be  a  valid  objection  if  there  were  no  sepa- 
rate classes  in  the  country,  and  the  loss  fell  on  the  same 
persons  who  make  the  gain.  Those  who  make  the  gain, 
however,  are  the  landlords,  while  the  losses  fall  either 
on  the  capitalists  or  on  the  laborers  or  on  both. 

Economists  often  call  attention  to  the  absurdities  of 
general  high  prices,  but  they  usually  fail  to  perceive 
that  the  same  absurdity  is  involved  in  general  low 
prices.  To  reduce  the  value  of  one  article  raises  the 
value  of  that  for  which  it  is  exchanged  just  as  much  as 
raising  the  value  of  one  commodity  decreases  the  value 
of  the  commodities  for  which  it  is  given.  If,  then,  it 
is  desirable  to  discover  what  are  the  permanent  effects 
of  a  change  in  foreign  trade,  it  can  be  done  only  by 
examining  what  articles  are  lowered  and  what  are 
raised  in  value.  Other  methods  will  give  us  only  the 
temporary  effects  which  accompany  the  change,  without 
revealing  anything  of  the  final  results  which  are  sure 
to  follow. 

If  two  countries  are  thrown  into  commercial  rela- 
tions, in  one  of  which  food  is  cheaper  than  in  the 
other,  all  the  laborers  and  capitalists  in  the  former 
(where  food  is  cheap)  will  lose,  while  the  same  classes 


FREE-TRADE.  195 

in  the  other  country  will  correspondingly  gain.  The 
opposite,  however,  will  be  the  effect  in  the  case  of 
the  landlords,  since  in  the  first  rents  will  rise,  while 
in  the  second  they  will  fall  to  a  like  degree.  With 
free-trade  existing  between  England  and  America, 
the  price  of  food  in  both  nations  must  be  nearly 
the  same,  and  would  be  just  the  same  but  for  the 
cost  of  transportation.  The  price  of  food  is  raised 
in  America  and  lowered  in  England.  At  the  same 
time  in  America  manufactured  goods  fall,  while  in 
England  they  rise.  This  would  be  advantageous  to 
English  capitalists  and  laborers,  and  to  a  like  degree 
disadvantageous  to  those  of  America,  while  American 
landlords  would  gain  at  the  expense  of  the  same  class 
in  England. 

It  may,  however,  be  urged  that  American  capitalists 
can  avoid  this  fall  of  wages  by  occupying  new  lands 
and  becoming  landlords  and  farmers  themselves.  In 
a  very  new  country  this  can  be  done,  often  without 
much  loss,  but  the  older  the  country  becomes  the  more 
difficult  is  the  change,  and  when  the  lands  are  once 
occupied  it  is  impossible. 

A  favorite  argument  of  the  free-traders  is  that  under 
a  system  of  free-trade  the  same  amount  of  capital  and 
labor  is  employed  as  under  a  system  of  protection,  and 
in  a  more  efficient  manner.  When  we  buy  we  also  sell, 
and  we  must  use  the  product  of  home  labor  to  buy 


196   I'^E  PREMISES  OF  POLITICAL  ECONOMY. 

foreign  goods,  and  hence,  it  is  claimed,  when  goods  are 
purchased  on  a  foreign  market  as  much  home  labor  and 
capital  are  employed  as  before,  while  they  are  used 
more  efficiently.  As  soon  as  rent  is  paid  in  a  country 
a  given  value  of  food  does  not  contain  the  same  quan- 
tity of  labor  as  the  manufactured  commodities  for 
which  it  is  exchanged.  If  a  farmer  sells  two  thousand 
dollars'  worth  of  corn  and  pays  six  hundred  dollars 
rent,  the  product  only  contains  fourteen  hundred  dol- 
lars of  wages  and  profit ;  hence  where  a  change  is  made 
by  which  food  is  exported  instead  of  manufactured 
articles,  much  less  labor  and  capital  are  employed,  as 
much  less  as  the  amount  of  the  rent. 

Whenever  an  article  is  purchased  in  a  foreign  market, 
it  is  true  that  a  domestic  product  must  be  given  in  ex- 
change for  it,  but  that  does  not  prove  that  tlie  home 
labor  market  has  not  thereby  suffered  a  contraction. 
Suppose  silk  for  the  English  market  had  been  pur- 
chased in  France,  and  English  cutlery  be  sent  to  France 
in  exchangee.  If  now  the  silk  should  be  manufactured 
in  England  and  exchanged  for  the  cutlery,  the  demand 
for  cutlery  would  not  be  reduced,  nor  would  the  de- 
mand for  any  other  article  decrease.  The  demand  for 
food  would  increase  to  supply  the  additional  labor  em- 
ployed by  the  silk-producers,  and  they  would  have  the 
cutlery,  before  exported,  with  which  to  purchase  the 
needed  food.    In  France,  on  the  other  hand,  the  demand 


FREE-TRADE.  197 

for  silk  would  be  reduced  by  the  value  of  the  cutlery 
formerly  imported,  and  there  would  be  a  quantity  of 
food  of  equal  value,  formerly  consumed  by  the  silk 
laborers  in  France,  for  which  there  would  be  no  de- 
mand, the  laborers  now  having  no  cutlery  to  exchange 
for  the  food.  There  being  in  France  a  surplas  of  food, 
and  in  England  a  surplus  of  cutlery  of  equal  value, 
these  would  be  exchanged  for  one  another.  The  result 
of  the  exchange  would  be,  English  cutlery  would  go  to 
France  as  before,  while  food  would  be  sent  to  England 
to  pay  for  it  instead  of  silk.  The  demand  for  labor  in 
England  would  be  increased  by  the  number  employed 
by  the  silk-producers,  while  to  a  like  amount  would 
the  demand  for  labor  in  France  decline. 

A  demand  for  a  product  of  home  industry  gives  its 
producers  the  same  power  to  purchase  goods  in  a 
foreign  market  as  those  with  whom  they  exchange 
previously  had,  and  foreign  commerce  does  not  thereby 
decline  unless  the  producers  of  the  commodity  buy 
food  which  was  formerly  exported.  In  any  other  case 
the  same  articles  will  be  exported  as  before,  and  food 
imported  instead  of  the  commodity  now  manufactured 
at  home. 

The  most  familiar  argument  used  to  supjwrt  free- 
trade  is  the  doctrine  of  comparative  cost,  which  was 
first  expounded  by  Ricardo,  and  has  ever  since  been 

accepted  as  the  corner-stone  of  the  free-trade  position. 

17* 


198   THE  PREMISES  OF  POLITICAL   ECONOMY. 

This  doctrine  asserts  that  the  exchange  of  commodities 
in  foreign  commerce  is  not  determined  by  the  absolute 
cost  of  production,  but  by  the  difference  in  the  com- 
parative cost. 

If  one  of  two  countries  has  the  advantage  in  pro- 
duction in  all  respects,  and  to  the  same  degree,  there 
would  be,  it  is  claimed,  no  exchange  of  commodities ; 
but  if  the  advantages  be  greater  in  some  commodities 
than  in  others,  an  exchange  would  take  place. 

Let  me  illustrate  by  a  familiar  example.  If  as  much 
cloth  can  be  produced  in  Poland  for  one  hundred  days' 
labor  as  can  be  produced  in  England  by  one  hundred 
and  fifty  days'  labor,  while  the  corn  which  is  produced 
in  Poland  by  one  hundred  days'  labor  cannot  be  pro- 
duced in  England  short  of  two  hundred  days'  labor,  a 
sufficient  motive  for  exchange  would  exist.  With  the 
quantity  of  cloth  produced  in  England  for  one  hun- 
dred and  fifty  days'  labor  England  could  purchase  as 
much  corn  as  was  produced  in  Poland  for  one  hundred 
days'  labor,  Avhich  would  be  as  great  a  quantity  as 
could  be  produced  in  England  by  two  hundred  days' 
labor.  By  importing  corn  from  Poland,  and  paying 
for  it  with  cloth,  England  would  obtain  for  one  hundred 
and  fifty  days'  labor  what  would  otherwise  cost  her  two 
hundred  days'  labor. 

The  fallacy  in  this  argument  lies  in  the  erroneous 
conception  of  the  cost  of  production,  by  which  the 


FREE-TRADE.  199 

effect  of  rent  is  disregarded.  Rent,  we  are  told,  is 
not  an  element  of  the  cost  of  production,  the  cost  being 
measured  solely  by  the  number  of  days'  labor  and  ab- 
stinence required  to  produce  a  commodity.  In  other 
words,  the  cost  of  production  is  held  to  be  affected 
only  by  wages  and  profits. 

Now,  rent  does  not  affect  the  cost  of  production  in 
the  sense  that  it  makes  general  high  or  low  prices,  but 
neither  do  wages  nor  profits.  High  wages  or  profits 
do  not  make  general  high  prices  ;  they  affect  prices 
only  inasmuch  as  different  articles  have,  as  elements 
of  their  cost,  wages  and  profits  in  different  propor- 
tions. If  in  the  cost  of  one  article  wa2;es  enter  as  an 
element  of  cost  more  largely  than  in  another  article, 
the  first  will  rise  and  fall  in  value  as  wages  rise  and 
fall,  while  the  value  of  the  second  will  change  in  an 
opposite  direction.  It  is  in  this  way  that  rent  affects 
the  cost  of  production. 

As  rent  increases,  those  articles  in  whose  value  rent 
enters  more  largely  will  rise  in  price,  while  others  in 
which  rent  enters  to  a  less  degree  will  fall  in  value. 

Agricultural  products  are,  of  course,  those  into  the 
price  of  which  rent  enters  most  largely,  and  these  will 
rise  in  value  as  rent  rises;  they  are,  therefore,  the  articles 
which  it  is  least  advantageous  to  produce  at  home  and 
most  advantageous  to  import  from  abroad.  This  argu- 
ment, put  in  the  terminology  of  Ricardo  and  Mill,  is 


200  THE  PREMISES   OF  POLITICAL   ECONOMY. 

as  follows:  The  cost  of  production  is  measured  by  the 
number  of  days'  labor  aud  abstinence.  But  the  num- 
ber of  days'  labor  required  to  produce  a  given  quantity 
of  food  depends  upon  the  amount  required  for  con- 
sumption. The  greater  the  gross  quantity  required 
the  larger  the  quantity  of  labor  which  must  be  used  to 
produce  each  part  of  it,  and  hence,  with  every  increase 
in  the  demand  for  food,  its  price  will  rise  and  that  of 
manufactured  articles  will  fall.  Labor  and  capital  are 
as  efficient  as  formerly  in  all  manufactured  articles, 
but  less  efficient  in  the  production  of  food.  Since, 
according  to  the  doctrine  of  comparative  cost,  those 
articles  of  commerce  in  which  the  country's  labor  is 
most  efficiently  employed  are  exported,  and  those  in 
which  the  labor  is  least  efficient  are  imported,  food  will 
now  be  imported  and  manufactured  goods  exported. 
Whether  or  not  rent  is  admitted  as  an  element  of  the 
cost  of  production  makes  no  difference  in  the  ar- 
gument if  the  fact  is  kept  in  view  that  the  cost  of 
production  of  food  increases,  and  the  efficiency  of  the 
labor  used  in  its  production  decreases,  as  the  pressure 
of  population  becomes  greater.  This  reveals  why 
profits  do  not  rise  when  wages  fall,  why  the  character 
of  the  external  trade  changes  when  wages  and  profits 
fall,  and  why  the  comparative  quantity  of  labor  re- 
quired for  the  production  of  different  commodities 
changes  as  population  increases. 


FREE-TRADE.  201 

Let  us  suppose,  as  does  Mill,  that  one  hundred  days' 
labor  in  producing  either  cloth  or  corn  would  yield  as 
much  in  Poland  as  one  hundred  and  fifty  days'  labor 
in  England.  In  that  case,  of  course,  no  trade  would 
follow,  but  if  rent  should  rise  in  one  country  and  not 
in  the  other,  exchange  would  become  profitable.  If 
rent  in  England  should  increase  through  the  demand 
for  more  food,  so  that  the  corn  which  could  be  pro- 
duced in  Poland  for  one  hundred  days'  labor  now  re- 
quires one  hundred  and  sixty  days'  labor  in  England, 
as  would  be  the  case  when  rent  equalled  ten  days'  labor, 
the  trade  would  be  profitable,  since  now  the  return  of 
one  hundred  and  fifty  days'  labor  in  cloth,  if  taken  to 
Poland,  will  exchange  for  the  product  of  one  hundred 
days'  labor  in  corn, — an  amount  equal  to  that  obtained 
in  England  by  one  hundred  and  sixty  days'  labor, — 
ten  days'  labor  would  be  saved,  overlooking  the  cost 
of  transportation  to  illustrate  the  underlying  principle. 

But  what  would  be  the  effect  in  Poland?  Either 
profits  and  wages  there  must  fall,  or  all  the  food  will 
be  shipped  to  England,  and  if  they  fall  enough  so 
that  the  rent  in  Poland  is  equal  to  that  in  England, 
the  trade  will  again  cease.  If  rent  should  again  rise 
in  England  through  the  cultivation  of  poorer  land,  so 
that  it  requires  one  hundred  and  seventy  days'  labor  to 
procure  the  amount  of  food  formerly  produced  in  one 
hundred  and  fifty  days,  trade  with  Poland  would  again 


202  THE  PREMISES  OF  POLITICAL   ECONOMY. 

be  profitable,  for  the  comparative  cost  would  be  again 
favorable  to  exchange,  and  Polish  capitalists  and  la- 
borers would  again  be  compelled  to  give  up  another 
portion  of  their  profits  and  wages  or  let  the  food  be 
exported  to  England. 

In  this  case  we  supposed  that  rent  rose  in  England, 
which  was  naturally  at  a  disadvantage  both  in  corn 
and  cloth ;  but  the  same  effects  would  take  place  if 
rent  should  rise  in  Poland,  for  England  would  now 
be  compelled  to  pay  a  like  rent  or  have  its  food 
shipped  to  Poland.  For  if  rent  rose  in  Poland  so 
that  the  corn  formerly  produced  in  one  hundred  days 
now  cost  one  hundred  and  ten  days'  labor,  and  the 
product  of  one  hundred  days'  labor  in  cloth  be  taken 
to  England,  it  will  exchange  for  the  product  of  one 
hundred  and  fifty  days'  labor  in  corn;  this,  when 
brought  back  to  Poland,  would  be  the  amount  obtained 
there  for  one  hundred  and  ten  days'  labor.  Hence  the 
trade  would  be  profitable,  and  would  continue  until  the 
English  wages  and  profits  were  so  reduced  that  they 
could  pay  a  rent  equal  to  the  rent  of  Poland,  when 
exchange  would  again  cease,  unless  a  subsequent  rise 
of  rent  in  Poland  should  again  make  trade  profitable 
and  cause  further  reductions  of  profits  and  wages  in 
England. 

The  foregoing  illustrations  show  the  effect  of  rent  on 
foreign  trade  when  one  of  the  exchanged  commodities 


FREE-TRADE.  203 

is  an  article  of  the  food-supply,  but  the  effect  is  just  as 
marked  when  both  the  exchanged  articles  are  manu- 
factured commodities.  If  it  costs  eighty  dollars  to 
make  in  France  a  quantity  of  silk  which  in  England 
costs  one  hundred  and  twenty  dollars,  and  if  it  costs 
ninety-six  dollars  in  France  to  make  a  quantity  of 
cloth  which  in  England  is  made  at  a  cost  of  one 
hundred  dollars,  then,  according  to  the  doctrine  of 
comparative  cost,  it  will  be  profitable  for  the  French 
to  buy  cloth  of  the  English  and  for  the  English  to 
buy  silk  of  the  French,  although  France  has  an  ad- 
vantage in  the  production  of  both  silk  and  cotton. 
This  would  be  true  provided  there  was  nothing  but 
cloth  in  England  which  the  French  wanted  and 
nothing  but  silk  in  France  desired  by  the  English; 
that  is,  so  long  as  the  trade  is  confined  to  cloth  and 
silk  it  would  be  profitable  and  advantageous. 

There  is,  however,  an  important  element  omitted, 
one  which  changes  the  entire  outlook  of  the  case. 
Tliere  is  a  class  of  articles  which  are  always  in  de- 
mand in  France,  England,  and  in  all  other  countries, 
namely,  articles  of  food.  A  bushel  of  wheat  or  a  bag 
of  potatoes  is  just  as  useful  in  one  country  as  in  an- 
other. Agricultural  produce  can  always  be  used  to 
procure  foreign  goods,  to  settle  any  balance  of  trade, 
and  is  the  usual  method  by  which  the  balance  of  trade 
is  settled.     Before  any  determination  of  the  profit  or 


204  THE  PREMISES  OF  POLITICAL   ECONOMY. 

loss  in  any  exchange  can  be  made,  the  price  of  food 
must  always  be  brought  into  consideration,  as  with  any 
of  the  articles  of  food  the  balance  can  be  settled  and 
the  course  of  trade  changed.  To  determine  in  our 
illustration  what  would  be  the  course  of  the  exchange, 
we  must  first  determine  the  price  of  food  in  both  coun- 
tries. The  result  of  this  investigation  will  decide  what 
will  be  the  result  of  the  exchange.  Either  the  price  of 
food  in  England  is  lower  than  that  of  France,  equal 
to  it,  or  dearer.  If  the  price  in  England  is  lower  than 
that  in  France,  or  equal  to  it,  all  tiie  cloth  and  silk  of 
both  countries  will  be  manufactured  in  France.  Over- 
looking the  cost  of  transportation,  no  one  in  England 
will  pay  one  hundred  dollars  for  a  quantity  of  cloth 
when  he  can  get  it  by  sending  ninety-six  dollars'  worth 
of  wheat  to  France,  and  still  less  will  any  one  pay 
one  hundred  and  twenty  dollars  for  silk  in  England 
when  eighty  dollars'  worth  of  wheat  will  buy  it  in 
France.  So  long,  then,  as  the  price  of  food  is  not 
greater  in  England  than  in  France,  the  manufacture 
of  both  silk  and  cloth  in  England  will  be  impossible, 
and  all  of  both  articles  needed  in  England  will  be 
obtained  from  France,  food  being  given  in  exchange. 

If,  however,  the  price  of  food  in  England  is  higher 
than  in  France,  the  course  of  trade  will  be  changed. 
Suppose  the  quantity  of  food  requisite  to  procure 
ninety-six  dollars'  worth  of  cloth  in  France  were  worth 


FREE-TRADE.  205 

one  hundred  and  five  dollars  in  England.  In  tliis 
case  all  the  cloth  would  be  manufactured  in  England 
both  for  France  and  England,  although  according  to 
our  supposition  the  same  labor  in  France  will  produce 
four  dollars'  worth  of  cloth  more  than  in  England. 
For  no  one  in  France  will  give  ninety-six  dollars  for  a 
given  quantity  of  cloth  if  this  money  invested  in  food 
will  sell  for  one  hundred  and  five  dollars  in  England, 
and  with  one  hundred  dollars  of  this  he  can  purchase 
the  amount  of  cloth  for  which  he  would  have  to  give 
ninety-six  dollars  in  France,  as  by  the  exchange  with 
England  he  could  save  five  dollars.  If,  again,  the 
price  of  food  in  England  were  still  higher,  so  that  the 
quantity  of  food  worth  eighty  dollars  in  France  cost 
one  hundred  and  twenty-five  dollars  in  England, 
neither  cloth  nor  silk  would  be  manufactured  in  France, 
although  the  same  labor  in  France  will  produce  forty 
dollars'  worth  of  silk  more  than  in  England.  Food 
costing  eighty  dollars  in  France  would  bring  one  hun- 
dred and  twenty-five  dollars  in  England,  and  by  ex- 
pending one  hundred  and  twenty  dollars  there,  the 
same  quantity  of  silk  could  be  obtained  which  would 
cost  eighty  dollars  in  France ;  that  is,  by  sending  food 
to  England  and  importing  cloth  and  silk  a  profit  could 
be  made,  although  the  labor  of  France  had  according 
to  our  supposition  a  decided  advantage  in  the  produc- 
tion of  both  commodities. 

18 


206   THE  PREMISES  OF  POLITICAL    ECONOMY. 

The  difference  between  the  prices  of  raw  material 
and  food  and  those  of  finished  commodities  determines 
the  rate  of  wages  and  interest.  If  in  one  country  this 
difference  is  small,  all  countries  which  exchange  with 
it  will  be  forced  to  reduce  their  wages  and  profits  to  its 
rates  or  lose  their  food-supply  and  other  raw  material. 

Suppose  that  in  all  countries  but  one,  fifteen  yards  of 
calico  or  three  yards  of  woollen  cloth  exchanged  for  a 
bushel  of  wheat,  and  that  in  the  remaining  country 
twenty  yards  of  calico  or  four  yards  of  woollen  cloth 
exchanged  for  a  bushel  of  wheat.  As  calico,  woollen 
cloth,  and  other  like  articles  can  be  produced  in  any 
quantity  demanded,  this  one  nation  could  produce 
enough  of  these  to  supply  all  the  other  nations,  and 
as  it  offers  better  terms  to  the  owners  of  wheat  than  do 
the  home-producers  of  cloth  and  calico,  it  would  obtain 
all  the  wheat  raised  in  the  various  countries  so  long  as 
the  home-producers  of  cloth  and  calico  demanded  a 
ratio  of  exchange  less  favorable  to  landlords  than  that 
offered  by  the  nation  having  cheap  labor  and  low  in- 
terest. Food  will  not  have  two  values  in  the  same 
market,  but  will  all  go  to  those  who  offer  the  highest 
price,  if  no  legal  obstacle  is  placed  in  the  way.  It  is 
only  by  duties  placed  upon  the  export  of  wheat,  or  on 
the  importation  of  cloth,  that  fifteen  yards  of  calico  or 
three  yards  of  woollen  cloth  can  be  made  to  exchange 
for  a  bushel  of  wheat,  if  for  this  bushel  a  foreign 


FREE-TRADE.  207 

nation  offers  twenty  yards  of  calico  or  four  yards  of 
woollen  cloth. 

So  long  as  foreign  trade  is  profitable,  each  nation  to 
a  great  degree  has  it  in  its  power  to  determine  what 
shall  be  the  ratio  of  exchange  between  raw  materials  and 
manufactured  commodities.  When  England  adopted  a 
free-trade  policy  she  did  it  to  change  the  ratio  of  ex- 
change, so  that  more  food  should  exchange  for  a  smaller 
quantity  of  manufactured  articles.  The  importation 
of  food  lowered  its  price,  reduced  rent,  and  raised 
wages  and  profits.  This  even  free-traders  can  see,  but 
what  they  fail  to  perceive  is  that  the  opposite  of  this 
must  be  the  effect  on  the  other  nations  exporting  food. 
In  these  countries  the  price  of  food  and  rent  will  be 
raised,  and  wages  and  profits  will  decline  to  a  like 
amount. 

The  income  of  a  farmer  is  derived  partially  from 
rent  and  partially  from  the  labor  and  capital  which  he 
employs.  A  rise  in  the  price  of  agricultural  produce 
increases  his  income  from  rent,  but  reduces  that  derived 
from  labor  and  capital,  and  the  amount  of  his  gain 
above  his  loss  will  be  indicated  by  the  rise  in  the  price 
of  his  land.  If  free-trade  is  adopted,  the  price  of  laud 
will  be  high  and  wages  and  interest  low,  and  the  owners 
of  land  will  have  all  the  profit  arising  from  the  high 
price  of  food.  This  does  not  show,  however,  that  the 
farmers  as   a   class  will  be   benefited,  since  they  are 


208  "^HE  PREMISES   OF  POLITICAL   ECONOMY. 

usually  not  the  real  owners  of  the  soil  in  countries 
where  land  has  a  high  price.  The  real  farmers  suSer 
along  with  the  other  classes,  as  their  wages  and  profits 
are  determined  by  the  same  circumstances,  while  those 
who  gain  by  the  high  price  of  land  may  live  wherever 
they  choose,  and  this  will  usually  be  far  away  from  the 
places  from  which  they  draw  their  income. 

The  welfare  and  prosperity  of  every  nation  demands 
that  the  value  of  food  and  other  raw  material  should  be 
as  low  as  possible  in  comparison  to  that  of  other  com- 
modities, the  whole  value  of  which  is  made  up  of  wages 
and  profits.  The  policy  which  will  bring  this  about 
is  the  best  one  for  a  nation  to  follow.  I  do  not  wish 
to  assert  that  it  is  never  desirable  that  the  value  of  food 
or  other  raw  material  should  be  raised  at  the  expense 
of  wages  and  profits.  Such  a  policy  will  often  produce 
good  results,  if  the  view  which  I  have  advanced  else- 
where of  the  causes  and  conditions  of  rent  is  correct. 
A  high  price  of  food  is  often  necessary  to  induce  men 
to  overcome  those  obstacles  which  cause  most  of  the 
land  of  a  country  to  remain  in  a  poor  state  of  cultiva- 
tion or  not  to  be  cultivated  at  all.  The  land  must  be 
drained,  forests  and  other  obstacles  must  be  removed, 
and  this  will  only  be  done  when  the  value  of  food  is 
high.  When  these  obstacles  are  once  removed,  the 
price  of  food  may  fall  without  the  supply  being  de- 
ceased.    The  same  is  true  of  mines.     There  are  many 


FREE-TRADE.  209 

expenses  involved  in  the  opening  of  mines  which  will 
only  be  incurred  when  the  value  of  mineral  products 
is  high ;  but,  as  in  the  case  of  the  food-supply,  when 
raining  industries  are  once  placed  in  a  prosperous  con- 
dition, the  supply  of  mineral  products  will  not  be  re- 
duced even  if  there  should  be  a  great  reduction  in  their 
value.  It  should,  however,  always  be  kept  in  mind 
that  such  bounties  to  land-owners,  whether  in  the  form 
of  free-trade,  when  the  foreign  price  is  higher  than  the 
domestic,  or  of  protection,  when  the  foreign  price  is 
the  lower,  are  at  the  expense  of  wages  and  profits,  and 
should  be  discontinued  as  soon  as  possible,  so  that  the 
value  of  food  and  other  raw  material  may  be  low  in 
comparison  to  other  commodities.  To  accomplish  this 
result  duties  either  on  the  exportation  of  food  or  on  the 
importation  of  manufactured  commodities  will  be  neces- 
sary so  long  as  any  foreign  nation  will  offer  more  for 
food  or  other  raw  material  than  would  be  offered  by 
domestic  producers  if  there  were  no  foreign  demand. 

These  illustrations  show  that  we  cannot  determine 
the  character  of  foreign  trade  by  considering  alone  the 
efficiency  of  labor  in  the  different  countries,  as  the  result 
is  conditioned  by  the  price  of  food,  and  until  this  is 
known  nothing  can  be  determined  as  to  the  course  of  ex- 
change. Everything  may  be  manufactured  at  a  point 
where  the  labor  of  the  world  is  most  inefficient,  if  at 

that  point  the  pressure  of  the  demand  for  food  is  so  great 
0  18* 


210  THE   PREMISES   OF  POLITICAL  ECONOMY. 

as  to  cause  its  price  to  be  higher  there  than  elsewhere. 
The  increase  of  rent  disturbs  the  natural  course  of  com- 
merce and  forces  upon  each  nation  as  unequal  a  dis- 
tribution of  wealth  as  that  of  the  nation  which  suffei's 
most  from  this  cause.  A  nation  has  only  one  means 
to  protect  its  people  from  the  high  price  of  food  caused 
by  the  unequal  distribution  of  wealth  in  a  neighboring 
nation,  and  that  is  by  duties  levied  either  on  the  impor- 
tation of  commodities  or  on  the  exportation  of  food. 
If  neither  of  those  means  are  resorted  to,  nothing  can 
prevent  such  an  approximation  of  the  value  of  food 
and  other  raw  material  to  the  value  of  manufactured 
commodities  as  will  produce  a  low  rate  of  wages. 


CHAPTER    VIII. 

THE  MEANS  OF  MAINTAINING  A  HIGH  STANDARD  OF 

LIFE. 

It  has  long  been  a  current  maxim  that  the  use  of 
cheap  food  is  destructive  of  a  high  standard  of  life,  and 
keeping  in  mind  the  facts  proven  in  the  preceding 
chapters,  it  is  easy  to  see  why  such  an  opinion  should 
be  prevalent.  The  cheap  kinds  of  food  are  those 
whose  production  requires  the  least  skill  and  capital, 
and  hence  a  lower  class  of  labor  is  employed  than  is 
possible  where  more  intelligence  is  requisite.  Wher- 
ever nature  does  much  and  man  but  little,  a  low  class 
of  laborers  can  accomplish  all  that  is  to  be  done. 
The  more  intelligent  classes,  as  the  price  of  food  rises 
above  what  they  can  pay,  gradually  disappear,  leaving 
society  made  up  of  two  distinct  classes,  the  very  rich 
and  powerful  on  the  one  hand,  the  poor  and  oppressed 
on  the  other. 

What  makes  the  difference,  for   instance,  between 

England  and  Egypt  lies  in  the  fact  that  in  England 

the  obstacles  to  be  overcome  are  so  great  that  a  much 

higher  class  of  labor  must  be  employed  than  is  the  case 

211 


212  THE   PREMISES   OF  POLITICAL   ECONOMY. 

in  Egypt,  where  nature,  by  means  of  the  river  Nile, 
keeps  up  the  fertility  of  the  land  and  allows  methods 
of  cultivation  to  be  employed  which  would  ruin  Eng- 
land in  a  few  years.  In  all  warm  countries,  such  as 
India,  Cuba,  and  Mexico,  little  clothing  is  required, 
food  is  cheap  and  abundant,  and  nature  does  so  much 
that  little  or  nothing  is  required  of  man  but  to  gather 
the  food  which  nature  has  prepared.  As  there  are  no 
obstacles  to  be  overcome,  the  lowest  classes  of  men  sur- 
vive and  displace  their  betters. 

The  effect  on  the  standard  of  life  of  a  lack  of  ob- 
stacles to  be  overcome  is  plainly  visible  in  the  Southern 
States  of  the  Union  as  compared  with  the  Northern 
States.  If  a  low  class  of  labor  in  the  North  by  the 
use  of  the  hoe  and  other  rude  implements  could  have 
produced  as  great  a  surplus  above  the  cost  of  produc- 
tion as  is  the  case  in  Southern  States,  slaves  would 
have  been  employed  in  the  North  as  well  as  in  the 
South,  and  the  economic  condition  of  the  North  would 
have  been  no  better  than  that  of  the  South.  What 
saved  the  North  was  the  fact  that  slaves  and  other  low 
classes  of  labor  were  not  profitable.  Thus  laboring 
men  with  a  much  higher  standard  of  life  were  allowed 
to  survive  in  the  North  than  would  have  been  the  case 
had  the  obstacles  been  fewer  and  less  difficult  to  sur- 
mount. 

The  same  condition  of  things  can  be  observed  in  all 


MAINTAINING  A   HIGH  STANDARD    OF  LIFE.  213 

parts  of  the  world.  Wherever  the  obstacles  are  few  the 
people  are  low  and  ignorant,  while  as  the  obstacles  in- 
crease the  inhabitants  become  more  intelligent,  since 
the  naore  ignorant  and  inefficient  classes  cannot  survive. 
Different  societies  and  different  classes  in  the  same  so- 
ciety can  be  correctly  graded  by  the  difficulties  which 
stand  in  the  way  of  making  a  living  requiring  skill, 
intelligence,  and  capital  to  overcome.  If  little  or  no 
skill  and  capital  are  required  in  a  country,  the  people 
will  be  ignorant  and  depraved,  and  lack  the  energy 
and  other  qualities  necessary  to  cause  a  high  civilization. 
It  is  only  where  the  means  of  supporting  a  low  class 
of  population  are  absent  that  the  higher  and  more  in- 
telligent classes  are  able  to  displace  their  inferiors. 
Wherever  game  or  fish  is  plenty,  or  cheap  food  is  ob- 
tainable, as  potatoes  in  Ireland  or  rice  in  India,  there 
is  sure  to  be  found  a  low  class  of  inhabitants.  None 
of  these  means  of  support  offers  any  obstacles  which 
cannot  be  overcome  by  the  lowest  classes  of  society,  and 
the  intelligent  and  skilful,  having  no  advantage  in  the 
conflict  for  life,  either  disappear  or  sink  to  the  level  of 
their  inferiors. 

The  intelligence  and  enterprise  of  any  society  de- 
pends upon  the  relative  numbers  of  the  occupations  re- 
quiring skill  and  capital  to  those  which  require  little  or 
none  of  these  requisites  for  their  successful  prosecution. 
If  in  but  few  places  skill  and  capital  are  required, 


214  THE  PREMISES   OF  POLITICAL   ECONOMY. 

while  the  mass  of  the  people  can  exist  without  them, 
then  a  low  civilization  is  a  necessary  consequence.  On 
the  other  hand,  if  the  greater  part  of  the  population 
must  be  intelligent  and  save  capital,  a  high  civilization 
will  be  the  result.  Whatever  can  be  done  by  cheap 
labor  is  always  done  by  it,  and  the  intelligent  classes 
are  confined  to  those  occupations  which  require  so  much 
skill  that  the  lower  classes,  not  being  able  to  perform 
the  work,  are  shut  out  from  competition. 

For  these  reasons,  a  high  civilization  has  been  de- 
veloped only  in  countries  where  the  obstacles  were  so 
great  that  only  the  more  intelligent  could  survive. 
Even  here  it  is  insecure,  as  the  obstacles  decrease  as 
the  country  advances  in  civilization.  Every  improve- 
ment makes  it  possible  for  a  lower  class  to  survive,  and 
progress  is  retarded  and  often  completely  stopped  by 
the  relative  increase  of  the  lower  classes,  which  the 
removing  of  obstacles,  insurmountable  to  them  alone, 
has  made  possible.  When  land  is  once  cleared  of  woods 
and  drained,  and  stones  and  other  like  hinderances  to 
cultivation  removed,  succeeding  generations  do  not 
have  to  do  these  things  over  again,  and  a  class  of 
laborei*s  come  in  which  lack  the  energy  that  was 
necessary  to  overcome  the  difficulties  to  be  found  in 
all  new  countries. 

Production  upon  a  large  scale  and  the  use  of  ma- 
chinery have  the  same  detrimental  effect,  for  the  pro- 


MAINTAINING   A   HIGH  STANDARD   OF  LIFE.  215 

portion  of  the  intelligent  to  the  unintelligent  is  greatly 
lessened  by  their  use.  All  the  capital  in  large  estab- 
lishments being  furnished  by  a  few  persons,  and  all  the 
intelligence  by  a  few  skilled  mechanics  and  foremen, 
all  the  work  can  be  performed  by  a  very  low  class  of 
laborers,  who  drive  out  the  skilled  and  intelligent  by 
the  low  price  at  which  they  offer  their  services. 

The  reduction  of  the  cost  of  transportation  and  the 
increase  of  commerce  operate  in  a  like  manner,  as  they 
allow  a  class  of  laborers  who  have  not  energy  enough 
to  immigrate,  to  ship  the  produce  of  their  labor  so 
cheaply  to  the  new  countries  as  to  lessen  the  return 
which  the  laborers  of  these  countries  would  otherwise 
obtain  for  their  labor.  At  the  same  time  the  low  rates 
of  passage  to  the  new  countries  cause  the  immigrants 
to  be  of  a  much  lower  grade  of  intelligence  than  they 
would  otherwise  be  if  commerce  had  more  obstacles  to 
encounter. 

Every  improvement  has  the  same  effect  as  if  the 
country  were  removed  farther  south  to  a  place  where 
less  energy  was  required  of  its  inhabitants,  and  if 
progress,  as  it  is  likely  to  do,  keeps  on  in  the  same 
direction  as  in  the  past,  all  the  present  civilized  nations 
will  soon  be  in  a  position  similar  to  that  occupied,  by 
Egypt  and  India,  and  the  difficulties  of  keeping  up  a 
high  civilization  will  be  as  great  as  they  are  in  these  hot 
countries.    The  proportion  of  the  occupations  requiring 


216   THE  PREMISES  OF  POLITICAL   ECONOMY. 

intelligence  as  a  condition  of  success  in  all  civilized 
nations  is  constantly  decreasing,  and  may  in  time  be- 
come as  small  as  it  now  is  in  either  Egypt  or  India. 

If  these  facts  be  true,  we  cannot  rely  on  natural 
causes  to  protect  us  from  the  evils  arising  from  igno- 
rance. These  evils,  assisted  by  free  competition,  oper- 
ate against  the  intelligent  and  aid  the  success  of  cheap 
labor  when  combined  with  low  interest.  Unless  as  the 
natural  obstacles  which  prevent  the  survival  of  the 
ignorant  are  lessened,  social  obstacles  which  have  a 
like  effect  are  put  in  their  places,  we  cannot  but  expect 
that  the  low  and  ignorant  will  gradually  displace  the 
intelligent,  until  at  length  civilization  itself  will  be 
destroyed  by  decrease  of  those  classes  which  sustain  it. 

Just  as  the  dam  which,  by  obstructing  the  free  pas- 
sage of  the  water  and  furnishing  the  power  by  which 
the  mill  is  propelled,  is  gradually  destroyed  by  the 
force  of  the  water  and  the  level  of  the  water  lowered 
so  that  at  length  the  water  has  not  power  to  turn  the 
mill,  so  progress  and  improvements  diminish  the  force 
of  civilization  by  reducing  the  obstacles  which  prevent 
the  survival  of  the  ignorant  until  civilization  loses  all 
its  force. 

We  would  not  think  of  permitting  the  level  of  the 
mill-pond  to  be  lowered,  nor  of  forbidding  repairs  be- 
cause natural  causes  had  lowered  it ;  nor  should  we  per- 
mit the  fact  that  progress  is  gradually  removing  the 


MAINtAININQ   A   HIGH  STANDARD    OF  LIFE.  217 

obstacles  which  uphold  intelligence  to  interfere  with  our 
supplying  the  place  of  those  obstacles  with  others  of  a 
social  nature  which  will  accomplish  all  that  the  natural 
obstacles  have  done  and  in  a  better  manner. 

It  is  only  in  social  affairs  that  the  theory  prevails 
that  men  should  do  nothing,  that  they  should  leave 
everything  just  as  they  happen  to  find  it,  and  not  try 
by  the  use  of  intelligence  to  improve  on  what  has  been 
given  them  by  nature.  We  do  not  leave  swamps  un- 
drained  because  water  naturally  stays  there,  nor  do  we 
suffer  mad  dogs  to  run  loose  because  hydrophobia  is  the 
result  of  natural  causes;  neither  should  we  fold  our 
hands  and  allow  a  decline  of  intelligence  because  the 
course  of  natural  events  tends  that  way. 

Considered  by  itself,  it  is  not  a  cause  for  regret  that 
the  labor  of  the  present  is  easier  than  that  of  the  past, 
that  machines  do  not  need  the  skill  of  former  times  to 
tend  them,  and  that  production  on  a  large  scale  is  more 
mechanical  and  requires  the  use  of  much  less  intelli- 
gence. Nor  is  it  a  necessary  misfortune  that  food  is' 
cheap  and  plenty,  and  that  but  little  clothing  is  needed 
in  warm  countries.  It  is  only  when  an  easy  mode  of 
getting  a  living  allows  men  to  be  careless  and  indolent, 
and  permits  the  continuance  of  low  social  classes  not 
otherwise  possible,  that  these  things,  really  beneficial 
under  other  conditions,  become  a  curse. 

The  causes  which  assist  the  survival  of  the  ignorant 
K  19 


218   THE  PREMISES   OF  POLITICAL   ECONOMY. 

arise  from  an  exchange  of  services  by  which  hiborers 
do  less  than  they  would  have  to  do  if  they  lived  in  an 
isolated  state,*  while  a  few  capitalists  not  only  take 
care  of  themselves  but  also  supply  deficiencies  of  the 
laborers. 

Capital,  intelligence,  skill,  and  manual  labor  are 
required  to  overcome  the  obstacles  which  are  placed  by 
nature  between  us  and  the  things  we  desire.  If  every 
man  were  isolated,  or  so  situated  that  he  had  in  all 
respects  to  do  his  part  towards  surmounting  these 
hinderances  to  the  gratification  of  our  desires,  none 
could  survive  but  those  who  had  all  the  requisites  for 
mastering  the  difficulties  of  nature. 

In  a  new  society,  so  long  as  every  one  is  compelled 
from  the  necessities  of  the  case  to  devote  his  whole 
energies  to  the  care  of  himself  and  family,  none  can 
survive  but  those  who  have  the  requisite  qualities. 
As  soon  as  some  persons  have  a  surplus  this  can  be 
and  always  is  used  to  allow  the  introduction  of  social 
classes  who  are  more  or  less  deficient  in  the  needed 


*  The  term  "  isolated  state"  in  this  and  following  passages  is 
not  used  in  an  absolute  but  in  a  relative  sense,  to  denote  that  form 
of  civilized  society  in  which,  owing  to  a  lack  of  any  extended 
division  of  labor  and  to  the  consequent  imperfect  development 
of  exchange,  each  individual  man  must  be  able  to  produce,  either 
alone  or  in  connection  with  his  immediate  family,  nearly  all  the 
different  kinds  of  material  commodities  which  he  wishes  to  enjoy. 


MAINTAINING   A   HIGH  STANDARD    OF  LIFE.  219 

qualities,  and  who  must  rely  upon  others  better  equipped 
than  themselves  for  mastering  those  difficulties  which 
are  insurmountable  to  the  ignorant  when  by  them- 
selves. A  few  persons  of  skill  and  surplus  capital 
form  a  combination  with  those  who  have  only  manual 
labor  to  offer  in  exchange  for  what  they  desire,  and 
this  combination  is  able  to  undersell  competitors  who 
combine  their  own  skill  and  capital  with  their  own 
labor.  When  this  happens  the  accumulation  of  capital 
lowers  the  rate  of  interest  to  a  minimum,  and  the  rapid 
increase  of  population,  which  is  always  an  accompani- 
ment of  ignorance,  causes  low  wages. 

If  any  society  wishes  to  continue  in  a  progressive 
state,  the  success  of  the  combination  just  mentioned 
must  be  prevented  by  such  social  restrictions  as  will 
allow  none  to  compete  in  the  combinations  of  labor 
and  capital  except  those  who  have  the  qualities  that 
would  enable  them  to  survive  in  an  isolated  state, 
where  they  would  of  necessity  depend  entirely  upon 
their  own  exertions.  As  intelligence,  skill,  and  capital 
are  necessary  to  overcome  the  difficulties  placed  about 
us  by  nature,  the  possession  of  these  indispensable 
conditions  to  success  should  be  required  of  all  persons 
desiring  employment,  or  enough  more  than  the  average 
of  one  of  the  conditions  should  be  demanded  to  make 
up  for  deficiencies  in  regard  to  other  conditions.  If  a 
person  does  not  possess  capital,  more  than  ordinary 


220  ^^^  PREMISES   OF  POLITICAL   ECONOMY. 

intelligence  and  skill  should  be  required  of  him;  and 
if  he  does  not  possess  them,  he  should  be  excluded 
from  all  places  where  he  would  through  his  deficien- 
cies injure  those  who  have  prepared  themselves  in  a 
proper  manner  to  overcome  the  natural  obstacles  which 
interfere  with  our  accomplishing  what  we  desire.  It 
is  the  want  of  such  social  restrictions  that  allows  the 
gradual  lowering  of  the  rate  of  wages  which  accom- 
panies the  progress  of  civilization.  In  each  new  genera- 
tion the  relative  number  of  those  who  possess  the  qual- 
ifications necessary  to  survive  in  an  isolated  state  is  re- 
duced, and  the  average  amount  of  the  deficiencies  of  the 
laboring  classes  below  the  original  standard  is  greatly 
increased.  Every  obstacle  which,  once  surmounted,  is 
forever  set  aside,  every  improvement  which  simplifies 
or  lessens  manual  labor,  every  change  in  production 
from  a  smaller  to  a  larger  scale  of  operations,  and 
every  introduction  of  machinery  which  displaces  skilled 
labor,  increases  the  amount  of  the  deficiencies  which 
the  laboring  classes  may  possess  without  their  being 
thereby  overcome  in  the  struggle  for  subsistence  that 
the  survival  of  the  ignorant  brings  upon  society. 

There  is  but  one  way  in  which  the  gradual  decline 
of  wages  can  be  prevented.  In  those  occupations 
where  the  combinations  of  cheap  labor  and  low  interest 
are  likely  to  succeed  there  should  be  required  of  all 
laborers  seeking  employment  such  tests  of  intelligence 


MAINTAINING   A   HIGH  STANDARD    OF  LIFE.  221 

and  skill  as  will  exclude  all  classes  below  the  average 
standard  placed  by  nature  for  those  who  labor  in  an 
isolated  condition  and  must  possess  in  themselves  all 
the  requisites  to  success.  If  in  a  factory  machinery  is 
introduced  by  which  a  lower  class  of  labor  can  be 
employed  than  formerly,  society  instead  of  allowing 
such  persons  to  displace  their  betters  should  require 
that  all  subsequent  laborers  should  have  the  same 
amount  of  intelligence  and  skill  as  was  necessary  in 
the  case  of  those  previously  employed. 

Ignorance  and  poverty  will  prevail  among  the  labor- 
ing classes  so  long  as  no  sufficient  incentive  is  given 
these  classes  to  increase  their  intelligence.  If  in  a 
given  factory  the  proportion  of  the  unskilled  labor  to 
the  skilled  is  ten  to  one,  as  is  usually  the  case,  ten  of 
every  eleven  laborers  can  have  no  hope  of  promotion. 
Any  amount  of  skill  which  they  may  possess  will  have 
no  economic  value  to  them,  and  as  they  have  no  in- 
ducement to  become  skilful  they  will  remain  in  igno- 
rance and  poverty.  Suppose  now  that  from  social  re- 
strictions none  but  skilled  labor  could  be  employed  in 
the  factory.  In  this  case  wages  of  skilled  labor  would 
have  to  be  paid  to  all,  and  the  ten  unskilled  men  would 
now  have  a  motive  that  would  be  sufficient  to  cause 
them  to  increase  their  skill  and  general  intelligence  up 
to  the  social  standard.     There  are  probably  not  five 

per  cent,  of  the  laboring  ]>opalation  of  any  civilized 

19* 


222  I'HE  PREMISES   OF  POLITICAL   ECONOMY. 

country  who  would  not  willingly  spend  many  years  in 
preparing  for  their  trade  if  thereby  their  future  wages 
would  be  doubled.  As  it  now  is,  if  one  parent  keeps 
his  children  out  of  school  he  gains  their  wages,  which 
another  parent  who  sends  his  children  to  school  loses. 
When  these  children,  having  become  men,  come  into 
competition  with  one  another  the  ignorant  are  at  no 
disadvantage,  since  no  test  of  intelligence  is  required. 

The  only  advantage  of  the  intelligent  is  that  one  in 
ten  can  obtain  some  recompense  for  the  expense  of  his 
education  by  obtaining  a  position  requiring  skill  and 
intelligence,  and  so  long  as  this  state  of  affairs  continues 
there  can  be  but  one  result, — nearly  nine-tenths  of  the 
population  will  belong  to  the  lowest  classes  of  society, 
and  will  be  a  hinderance  to  all  social  progress. 

Both  a  high  rate  of  interest  and  high  wages  are 
necessary  to  preserve  a  high  standard  of  life,  and 
any  plan  of  social  improvement  which  would  secure  a 
high  rate  of  wages  by  lowering  interest  is  defective. 
A  reduction  of  the  rate  of  interest  can  only  be  accom- 
plished by  such  a  diminution  of  the  inducement  to 
save  as  will  cause  all  capital  to  be  concentrated  in  the 
hands  of  a  few  persons.  A  class  of  laborers  who  do 
not  save  for  themselves  will  always  be  so  deficient  in 
intelligence  as  to  lack  those  qualities  necessary  to  main- 
tain high  wages,  and  they  will  necessarily  sink  to  aa 
low  a  social  level  as  the  surrounding  natural  conditions 


MAINTAINING   A    HIGH  STANDARD    OF  LIFE.  223 

will  allow.  What  is  needed  is  that  every  one  be  re- 
quired to  do  all  his  part,  and  that  each  one  should  ob- 
tain the  whole  reward  which  nature  gives  for  labor  and 
abstinence.  So  long  as  interest  is  low,  and  cheap  labor 
is  allowed  to  compete  with  skilled  labor,  the  benefit  of 
low  interest  does  not  come  to  the  laborers,  nor  that 
of  cheap  labor  to  the  capitalists,  but  the  loss  of  both 
classes  goes  to  the  landlords,  who  reap  all  the  benefits 
of  low  interest  and  cheap  labor,  no  one  receiving  the 
whole  of  that  reward  which  nature  offers  to  those  who 
save  and  labor.  If  intelligent  laborers,  who  would  save, 
had  only  to  compete  with  the  ignorant,  who  would  not, 
the  former  could  win  in  the  contest  everywhere;  it 
is  only  when  the  latter  are  reinforced  by  low  interest 
that  they  obtain  the  victory. 

If  this  be  true,  then  the  endeavors  of  the  state  and 
the  desires  of  the  people  to  produce  a  low  rate  of  in- 
terest are  not  favorable  to  the  growth  of  capital  and 
the  prosperity  of  the  country.  The  policy  of  the 
state  should  be  rather  to  check  the  growth  of  that 
class  of  capital  which  is  only  loaned  on  safe  invest- 
ments, and  encourage  those  classes  of  laborers  who  are 
willing  to  save  if  sufficient  inducement  is  offered. 

The  state  has  ample  power  to  do  this,  and  that,  too, 
without  increasing  the  province  of  government  by 
modifying  the  laws  relating  to  property  and  the  en- 
forcement of  contracts.     All  the  powers  of  the  govern- 


224  THE  PREMISES  OF  POLITICAL   ECONOMY. 

ment  are  now  exerted  to  the  uttermost  to  make  all 
kinds  of  property  safe  investment  and  to  enforce  all 
kinds  of  contracts,  on  the  grounds  that  these  laws  are 
necessary  to  encourage  the  growth  of  capital  and  lower 
the  rate  of  interest.  Of  the  kinds  of  capital  which 
these  laws  encourage,  most  progressive  nations  have  as 
much  already  as  can  find  investment,  and  much  more 
of  this  kind  of  capital  could  be  had  if  employment 
for  it  could  be  found.  For  these  reasons  many  of  the 
present  rigid  laws  for  the  enforcement  of  contracts 
could  be  modified  and  yet  not  reduce  the  amount  of 
capital  below  what  is  needed. 

For  property  there  are  two  kinds  of  security,  the 
one  insuring  to  each  producer  the  fruits  of  the  industry 
obtained  by  his  own  exertions,  and  preventing  other 
persons  from  appropriating  these  remunerations  for 
labor  without  the  owner's  approval ;  the  other  security 
insures  to  the  owner  the  return  of  property  which  with 
his  consent  has  passed  into  the  hands  of  others.  These 
two  propositions,  that  property  should  be  protected 
and  that  contracts  should  be  enforced,  rest  on  very 
different  grounds.  The  state  cannot  at  the  same 
time  fully  protect  property  and  enforce  all  contracts. 
It  is  the  purpose  of  most  contracts  to  lower  the  rate 
of  interest  by  giving  the  creditor  better  security, 
and  where  the  rate  of  interest  is  low  the  increase  of 
rent  takes  from  every  one  a  large  part  of  that  reward 


MAINTAINING  A    HIGH  STANDARD    OF  LIFE.  225 

to  which  those  who  both  labor  and  save  have  a  just 
claim. 

The  need  of  protection  of  property  is  evident,  and 
of  it  the  government  cannot  furnish  too  great  an 
amount;  but  the  interests  of  the  public  suffer  when 
the  enforcement  of  contracts  is  not  limited  to  those 
cases  where  it  is  plain  the  public  is  benefited.  So 
long,  for  instance,  as  A  tills  a  field  himself  the  pro- 
duce is  his,  and  the  laws  should  protect  him  in  its  pos- 
session. When,  however,  A  yields  possession  of  the 
land  to  B,  on  an  agreement  that  B  shall  give  him  a 
share  of  the  produce  of  his  labor  on  the  land,  there 
are  many  reasons  why  the  public  welfare  demands  the 
enforcement  of  the  contract.  When  B  agrees  to  pay  A 
a  fixed  sum  for  the  use  of  the  land,  and  if  the  produce 
is  not  sufficient  to  pay  this  rent  A  may  take  B's  cattle, 
horses,  or  other  capital,  the  reasons  for  the  enforcement 
of  this  contract  become  less  evident ;  but  still  less  evi- 
dent are  these  reasons  when  B  agrees  that  A  may  take 
his  future  earnings  to  make  up  for  a  deficiency  in 
the  produce  of  the  land.  The  enforcement  of  con- 
tracts has  often  been  carried  much  further  than  in 
the  above  cases :  creditors  could  put  the  debtors  in 
jail,  or  sell  them  and  their  families  as  slaves,  and 
sometimes  the  Shy  lock  could  demand  even  his  pound 
of  flesh. 

Certainly  all  these  means  of  enforcing  contracts  are 
P 


226   I'HE  PREMISES   OF  POLITICAL   ECONOMY. 

not  now  necessary,  and  an  examination  of  the  present 
laws  for  the  protection  of  contracts  will  reveal  many 
points  where  a  modification  would  on  economic  grounds 
be  desirable.  At  present  the  payment  of  all  debts  is 
enforced  by  law,  and  no  difference  is  made  whether  the 
debtor  is  a  laborer,  a  clerk,  a  farmer,  or  a  merchant. 
Many  classes  never  ought  to  be  allowed  to  run  into 
debt,  and  the  best  way  to  prevent  it  is  not  to  allow 
certain  debts  to  be  enforced  in  the  courts.  It  would 
be  far  better  for  the  laborers  to  pay  cash  for  what 
they  purchase,  instead  of  buying  on  credit  and  pay- 
ing greatly  increased  prices  at  a  later  period.  When 
til  is  practice  is  once  begun,  they  are  in  the  power  of 
the  storekeepers  if  the  state  allows  such  contracts  to 
be  enforced.  The  garnishment  of  wages  should  not 
be  allowed,  even  if  the  laborers  really  wished  for  it, 
and  still  less  grounds  are  there  for  its  enforcement 
when  all  the  better  classes  of  laborers  oppose  it.  If 
the  payment  of  such  debts  as  are  ordinarily  secured 
by  the  garnishment  of  wages  could  not  be  enforced, 
only  those  laborers  who  had  character  and  a  sense  of 
honor  could  obtain  credit,  and  they  would  be  just  the 
ones  who  would  not  abuse  the  privilege.  Besides, 
this  would  encourage  the  growth  of  societies  among 
the  laborers  to  assist  and  aid  one  another,  and  such 
societies  could  do  more  than  the  law  can  to  aid  sick 
and  unfortunate  workmen,  and  without  the  necessary 


MAINTAINING  A   HIGH  STANDARD    OF  LIFE.  227 

misery  which  accompanies  the  enforced   payment  of 
debts  by  law. 

The  same  course  of  reasoning  shows  that  those  who 
are  not  laborers  in  the  narrow  sense,  such  as  clerks, 
salesmen,  and  professional  men,  would  be  better  off  if 
the  right  to  enforce  contracts  against  their  salaries  were 
taken  away.  They  have  no  need  of  capital,  and  if 
they  have  not  honor  enough  to  pay  their  debts  will- 
ingly, it  is  much  better  that  they  be  deprived  of  the 
power  to  obtain  the  means  of  living  extravagantly.  It 
is  easy  to  decide  whether  a  man  is  engaged  in  some 
business  requiring  capital,  and  only  those  who  need  it 
for  their  business  should  the  state  encourage  to  obtain 
capital  by  means  of  a  contract  which  the  state  agrees  to 
enforce,  and  even  in  these  cases  the  use  of  govern- 
mental power  to  enforce  contracts  should  be  confined 
to  the  narrowest  limits. 

It  is  only  when  both  parties  to  the  contract  are  en- 
gaged in  some  commercial  enterprise  where  buying  and 
selling  form  a  legitimate  part  of  their  business  that  cour 
tracts  should  be  strictly  enforced  by  law.  To  such  conr 
tracts  there  can  be  no  objectiou  on  the  ground  that 
they  favor  cheap  labor,  and  from  them  there  is  much 
advantage  to  be  derived.  Without  a  class  of  dis- 
tributors whose  contracts  are  enforced  by  law  the  ad- 
vantages obtained  from  localizing  industries  in  partic- 
ular plages,  and  the  differences  of  soil  and  climate, 


228   THE  PREMISES   OF  POLITICAL   ECONOMY. 

cannot  be  utilized.  The  benefit  derived  from  the  en- 
forcement of  these  contracts,  however,  does  not  prove 
that  the  state  should  allow  its  legal  machinery  to  be 
used  to  oppress  the  industrial  classes,  who  never  ought 
to  have  had  capital  loaned  them.  The  exchange  of 
commodities  between  distant  places  adds  largely  to  the 
efficiency  of  labor,  but  to  no  greater  extent  than  does 
the  act  of  producing  before  consuming  on  the  part  of 
all  engaged  in  any  industry.  It  is  not  expedient  to 
trample  down  one  harvest  to  reap  another  when  a  more 
discriminating  method  of  procedure  will  enable  both 
of  them  to  be  secured. 

Whenever  the  enforcement  of  contracts  enabling: 
men  to  consume  before  they  produce  is  lessened,  the 
rate  of  interest  rises,  because  more  vigilance  is  required 
of  creditors  and  less  security  given  to  them.  This 
effect  is  much  more  than  compensated  for  by  the  break- 
ing up  of  the  combination  of  cheap  labor  and  low  in- 
terest, by  which  the  honorable  and  intelligent  are 
driven  entirely  out  of  many  departments,  and  much 
reduced  in  numbers  in  all  others.  The  higher  rate  of 
interest  induces  all  the  people  to  save  for  themselves 
instead  of  borrowing,  and  capitalists  as  a  class  will 
vanish  along  with  the  low  class  of  laborers  by  which 
they  are  sustained.  A  fall  of  the  rate  of  interest  is  a 
sign  that  capital  is  not  fulfilling  its  proper  economic 
function  of  extending  production,  and  that  the  nation 


MAINTAINING  A    HIGH  STANDARD    OF  LIFE.  229 

can  get  its  supply  of  capital  without  submitting  to  as 
hard  terms  as  formerly,  and  better  terms  should  be  pre- 
ferred to  a  low  rate  of  interest  and  the  disastrous  con- 
sequences in  which  it  is  sure  to  involve  the  whole 
nation. 

In  all  productive  enterprises  there  is  considerable 
risk.  Some  years  the  crops  are  better  than  others,  rail- 
roads and  ships  do  not  always  have  the  same  amount 
of  goods  to  transport,  and  the  producers  of  manu- 
factured commodities  do  not  find  as  ready  sales  for 
their  products  at  one  time  as  at  another.  Although 
these  risks  are  very  much  greater  in  one  occupation 
than  in  others,  yet  there  is  always  some  risk  in  every 
productive  undertaking,  and  the  question  necessarily 
arises.  Who  shall  bear  the  risk  ?  According  to  the 
method  of  division  of  profits  usually  pursued  in  factories 
and  other  corporations,  a  certain  rate  of  interest  is  given 
for  as  much  capital  as  can  be  securely  invested,  and 
the  rest  of  the  capital  is  held  by  the  stockholders  or 
partners,  who  assume  all  risks.  In  this  way  the  losses 
are  borne  and  the  extra  gains  are  secured  by  a  very 
few  persons,  and  from  such  an  arrangement  there  can 
be  but  one  result.  The  laborers  and  the  mass' of  the 
capitalists  who  seek  safe  investments  will  have  much  less 
intelligence,  and  thus  interest  and  wages  will  sink  to  a 
lower  point  than  would  be  the  case  were  all  the  inter- 
ested parties  compelled  to  assume  their  share  of  the  risk. 

20 


230   THE   PREMISES  OF  POLITICAL   ECONOMY. 

The  division  of  capital  into  two  classes — safe  and 
unsafe  investments,  or  bonds  and  stocks,  as  they 
are  commonly  called — causes  the  cautious  classes  of 
capitalists  to  prefer  bonds,  while  the  sanguine  and  ad- 
venturous persons  take  the  stocks  and  have  the  entire 
control  of  industry.  Such  men,  naturally  bold  and 
reckless,  tend  strongly  to  speculation  rather  tlian  to 
legitimate  enterprise,  since  greater  immediate  profit  is 
often  obtained  by  the  former  than  by  the  latter  means. 
In  any  nation  where  the  more  daring  portion  of  the 
capitalists  are  allowed  to  assume  all  the  risk  of  every 
enterprise  there  will  be  sure  to  grow  up  a  class  loving 
such  risks,  and  the  business  of  the  country  will  be 
turned  from  the  most  substantial  investments  for  capi- 
tal to  those  most  hazardous,  yet  offering  a  chance  for  a 
few  to  make  a  great  gain.  Daring  capitalists  may 
prefer  a  small  gross  profit  in  a  hazardous  enterprise, 
most  of  which  will  be  obtained  by  the  few  who  are 
successful,  to  a  safe  investment  offering  a  much  greater 
gross  return;  but  surely  this  speculative  spirit  is  not 
what  the  public  welfare  demands.  Most  of  the  indus- 
tries of  a  country  will  always  be  in  dangerous  hands 
so  long  as  two-thirds  of  the  capital  engaged  in  them  is 
in  bonds  or  notes  and  the  stock  is  again  given  as  se- 
curity for  the  greater  part  of  its  value.  The  pros- 
perity of  the  people  demands  that  all  capitalists,  and 
even  laborers,  should  bear  their  share  of  the  risks  in- 


MAINTAINING   A   HIGH  STANDARD   OF  LIFE.  231 

cident  to  all  productive  enterprises,  and  receive  a  part 
of  the  extra  gains.  If  all  of  the  capital  of  any  cor- 
poration were  in  stock,  and  this  stock  could  not  be 
given  as  security  on  which  to  borrow  more  money, 
much  the  greater  part  of  speculation  would  be  done 
away  with.  The  more  conservative  capitalist  now 
holding  bonds  would  then  have  a  voice  in  the  manage- 
ment of  the  affairs  of  the  company,  while  the  more 
daring  persons,  now  inclined  to  take  risks,  would  be 
limited  to  their  own  capital,  and  thus  could  speculate 
much  less  than  at  present,  when  by  giving  their  stock 
as  security  they  can  often  obtain  an  amount  of  stock 
five  or  six  times  that  of  their  capital.  Speculation 
can  only  be  limited  by  greatly  increasing  the  propor- 
tion of  stocks  to  the  safe  investments,  such  as  bonds 
and  notes,  and  by  limiting  the  amount  for  which  stock 
or  other  property  can  be  given  as  security  to  a  very  low 
per  cent,  of  its  value. 

The  extent  of  the  injury  which  a  strict  enforcement 
of  contracts  brings  to  a  nation  is  largely  determined 
by  the  stability  of  the  value  of  commodities.  Where 
the  fluctuations  of  values  are  small  and  infrequent, 
the  injury  is  much  less  than  when  large  and  frequent 
changes  in  values  cause  the  return  for  labor  to  be  so 
uncertain  that  all  industry  becomes  largely  a  matter 
of  speculation.  The  more  extended  use  of  land  having 
great  obstructions  to  its  cultivation,  production  on  a 


232    THE   PREMISES   OF  POLITICAL   ECONOMY. 

large  scale,  and  the  many  evils  arising  from  the  use  of 
cheap  labor  and  low  interest,  all  tend  to  increase  the 
fluctuations  of  values,  and  to  destroy  the  stability  of 
the  value  of  the  precious  metals  used  as  money  by  the 
whole  world.  From  these  causes  the  risks  of  all  pro- 
ductive enterprises  have  in  the  past  gradually  increased, 
and  they  will  soon  be  so  great  that  a  small  indebted- 
ness may  ruin  the  most  cautious  producer  if  the  en- 
forcement of  contracts  is  not  limited,  and  every  one 
engaged  in  production  compelled  to  assume  his  proper 
share  of  the  risk. 

The  reason  usually  assigned  for  not  limiting  the 
power  of  contracting  debts  is,  that  by  this  means  the 
capital  of  a  country  gets  into  the  most  efficient  hands. 
Certainly  it  is  often  true  that  the  efficiency  of  capital 
is  thus  increased,  but  surely  capital  is  not  best  utilized 
when  nine- tenths  of  it  is  out  of  the  control  of  those 
by  whom  it  has  been  saved. 

In  former  times,  when  the  tendency  to  save  was 
Aveak  and  the  disinclination  to  lend  capital  was  strong, 
the  enforcement  of  contracts  did  add  much  to  the  effi- 
ciency of  the  small  amount  of  capital  which  the  nation 
possessed.  At  the  present  time,  however,  there  is  no 
lack  of  capital  for  those  industries  where  the  scale  of 
production  is  large  enough  to  offer  security  to  those 
seeking  safe  investments.  If  further  progress  is  made, 
it  must  be  accomplished  by  favoring  those  who,  saving 


MAINTAINING  A   HIGH  STANDARD   OF  LIFE.  233 

for  themselves,  will  utilize  the  many  opportunities  to 
labor  which  production  on  a  large  scale  has  not  de- 
veloped. The  enforcement  of  contracts  adds  to  the 
efficiency  of  the  surplus  capital  which  cannot  be  em- 
ployed in  the  possessor's  own  business,  but  it  reduces 
the  return  on  the  capital  which  the  owner  uses  him- 
self. Safe  investments,  therefore,  should  be  encouraged 
when  but  few  are  willing  to  save.  The  extra  security, 
however,  should  be  gradually  withdrawn  as  the  rate 
of  interest  falls,  so  that  a  greater  number  of  persons 
will  have  sufficient  inducement  to  save  and  become 
skilled.  By  this  method  alone  can  all  those  opportu- 
nities to  labor  be  utilized  which  require  for  their  de- 
velopment a  skilled  workman  who  saves  for  himself. 
The  state  should  not  prevent  all  safe  investments,  but 
it  should  limit  them,  so  as  to  cause  all  necessary  risks 
to  be  borne  by  as  large  a  part  of  the  producers  as 
possible. 

Whenever  the  government  enforces  all  contracts  the 
creditors  rely  too  much  on  the  power  of  the  state, 
and  do  not  use  that  vigilance  that  would  otherwise  be 
necessary.  The  capitalists  becoming  less  intelligent 
when  thus  patronized  by  the  state,  seek  only  safe  in- 
vestments, such  as  bonds  and  mortgages,  while  the 
same  influences  lower  the  moral  standard  of  the  debtors, 
since  capitalists  would  as  soon  lend  to  dishonorable  as 

to   honorable  men  if  there  is  a  chance  to  protect  their 

20* 


234  THE    PREMISES   OF  POLITICAL   ECONOMY. 

interests  by  legal  means.  That  society  could  exist  and 
prosper  without  contracts  being  enforced  by  the  gov- 
ernment to  any  extent  is  well  illustrated  in  the  United 
States,  where,  on  account  of  the  expense,  delay,  and 
uncertainty  of  justice,  many  classes  of  capitalists  are 
forced  to  be  careful  that  none  of  their  money  gets  into 
dishonest  hands  and  use  that  vigilance  which  would  be 
necessary  if  no  enforced  debts  were  allowed  by  law. 

Wherever  capitalists  must  rely  more  on  themselves 
than  on  the  laws,  commerce  and  trade  are  in  a  better 
condition  and  the  rate  of  profit  better  than  in  those  in- 
dustries where  the  laws  can  be  fully  enforced.  Agri- 
culture forms  the  best  example  for  showing  the  evil 
results  of  capitalists  relying  on  the  law.  The  crops  of 
the  farmer  mature  only  at  certain  seasons  of  the  year, 
and  whatever  he  has  is  in  plain  sight  and  cannot  be 
removed.  For  these  reasons  a  dislionest  man  can  be 
placed  on  a  farm,  and  easily  watched  and  prevented 
from  escaping  without  the  payment  of  rent  or  interest. 
Whenever  the  honest  and  intelligent  farmer  must  com- 
pete  with  the  low  and  ignorant  of  his  class,  aided  by 
an  absentee  capitalist,  the  combination  of  ignorance  and 
capital  held  together  by  the  force  of  the  law  always  in 
the  end  succeeds.  Those  having  a  low  rate  of  interest 
and  cheap  labor  can  pay  a  higher  price  for  land  than 
the  intelligent,  upright  farmer,  wiio  needs  high  wages 
and  interest  in  order  to  have  sufficient  inducement  to 


MAINTAINING   A    HIGH  STANDARD   OF  LIFE.  235 

live  and  bring  up  a  family  who  are  not  a  dishonor  to 
the  nation.  If  the  a<rricultural  classes  are  ever  made 
to  prosper,  it  can  only  be  done  by  such  limitations  of 
the  power  to  enforce  contracts  and  the  rights  of  prop- 
erty in  land  as  will  make  it  unprofitable  to  let  any  but 
the  strictly  honest  and  intelligent  occupy  farms.  Then 
there  will  be  a  higher  rate  of  profit  and  a  great  increase 
of  produce  and  a  general  improvement  of  the  agricul- 
tural classes. 

In  many  States  of  the  Union  important  steps  have 
been  taken  in  the  right  direction  by  enacting  exemption 
laws  and  giving  homestead  rights  to  the  occupant. 
These  laws  will  be  of  little  importance,  however,  so 
long  as  the  parties  interested  are  allowed  to  sign  away 
their  rights,  since  the  very  classes  which  should  be 
prevented  from  obtaining  possession  of  the  land  are 
always  willing  to  sign  away  all  rights  and  thus  defeat 
the  purpose  of  the  act. 

The  principle  which  should  be  recognized  in  laws 
protecting  the  agricultural  as  well  as  all  other  classes 
of  producers  is,  that  no  one  should  have  a  legal  right 
to  pledge  the  produce  of  his  own  labor  before  he  has 
produced  it.  The  share  of  annual  produce  of  the  coun- 
try due  to  the  laborers  should  be  reserved  for  them, 
and  the  law  should  not  take  any  one's  share  from  his 
possession  on  account  of  any  contract  made  before  the 
work  is  performed,  nor  should  the  law  enforce  any  lien 


236   ^^^   PREMISES   OF  POLITICAL   ECONOMY. 

on  the  annual  produce  of  industry  that  will  reduce  the 
share  that  should  go  to  the  laborers.     The  right  to 
mortgage  or  rent  land  should  be  so  limited  that  there 
will  be  enough  joroduce  remaining  to  give  those  who 
labor  on  the  land  their  part  of  the  annual  produce, 
and  no  agreement   which  allows    rent   or  interest  to 
absorb  the  laborer's  share  should  be  enforced.    Natural 
causes  will  not  allow  any  class  to  survive  who  consume 
before  they  produce,  and  all  laws  which  allow  this  to 
be  done  are  detrimental  to  public  welfare.     Instead  of 
consuming  months  before  they  produce,  the  laborers 
should  produce  months  before  they  consume.     It  is  a 
law  of  nature  that  labor  performed    before  the  com- 
modity is  needed  will  greatly  increase  the  produce,  and 
no  social  regulation  should  allow  those  who  consume 
before  they  produce  to  displace  those  who  conform  to 
what  nature  demands.     The  laws  which  aid  those  who 
consume  before  they  produce  are  said  to  aid  poor  men, 
but  if  properly  examined  it  will  be  seen  that  such  laws 
do  not  aid  poor  men,  they  make  poor  men.     The  cor- 
rect method  of  aiding  the  poor  and  unfortunate  is  in 
the  formation  of  societies  among  the  laborers  for  that 
purpose,  and  in  this  way  those  who  deserve  aid  can 
get  it.     To  allow  laws  favoring  ignorant  and  improvi- 
dent men  to  be  enforced,  causes  the  displacement  of 
both  the  honest  laborer  and  those  poor  men  who  really 
deserve  aid,  by  a  lower  class  of  laborers  not  willing  to 


MAINTAINING   A    niOII  STANDARD    OF  LIFE.  237 

conform   to    natural   laws.      Any  one  who  consumes 
before  he  produces  is  a  slave  of  some  one  else,  and  no 
free  man  should  be  compelled  to  compete  with  slave 
labor.     The  poor  and  the  rich  are  always  found  in 
combination,  and  when  no  legal  obstacles  are  placed  in 
the  way  of  the  success  of  this  combination,  they  will 
force  the  price  of  labor  so  low  and  that  of  food  so  high 
as  to  drive  out  the  independent  and  intelligent  laborers 
who  would  furnish  their  own  capital  and  thus  make 
co-operation  a  success.     It  is  only  where  tests  of  intel- 
ligence prevent  the  employment  of  cheap  labor,  and 
where  limitations  to  the  enforcement  of  contracts  and 
the  right  of  inheritance  prevent  the  fall  of  interest,  that 
this  combination  can  be  displaced  by  men  who  conform 
to  nature  enough  to  be  really  free  ;  and  no  one  is  really 
free  but  he  who  possesses  such  qualifications  as  would 
enable  him  to  survive  if  he  were  placed  in  an  isolated 
state  where  he  would  be  compelled  to  supply  all  his 
wants.     When  this  is  done  poverty  and  ignorance  will 
no  longer  increase  as  civilization  progresses,  and  each 
man  will  obtain  all  the  reward  which  nature  gives  in 
return  for  intelligence,  labor,  and  abstinence. 

For  the  preservation  of  a  high  standard  of  life  more 
than  a  high  rate  of  interest  and  wages  is  necessary. 
Mankind  has  a  tendency  to  increase,  and  this  increase 
must  be  provided  for  by  an  extension  of  cultivation. 
Although  the  tendency  to  increase  is  reduced  as  man 


238   ^^^  PREMISES   OF  POLITICAL  ECONOMY. 

conforms  more  and  more  to  the  demands  of  nature  and 
thus  acquires  increased  means  of  enjoyment,  yet  the  en- 
larged population  must  be  provided  for,  or  society  will 
sink  to  a  lower  social  state,  where  the  higher  rate  of 
increase  will  be  required  to  replace  the  greater  losses 
through  premature  deaths,  due  to  the  less  favorable 
surroundings.  The  growth  of  population  compels 
mankind  either  to  progress  or  retrograde;  there  is  no 
available  middle  course;  either  through  an  extension 
of  the  field  of  employment  the  wants  of  all  men  must 
be  provided  for,  or  the  evils  of  an  unequal  distribution 
of  wealth  will  reduce  the  efficiency  of  labor  and  cause 
man  to  fall  back  to  a  prior  social  state.  An  extension 
of  production,  however,  would  of  itself  be  desirable 
even  if  there  were  no  necessity  forcing  man  in  this 
direction.  The  obstacles  to  cultivation  when  once  sur- 
mounted do  not  cause  additional  proportional  labor  to 
be  used  in  tilling  the  new  land,  while  the  more  varied 
consumption  and  the  enlarged  capacities  of  enjoyment, 
which  always  accompany  a  greater  conformity  to  nature, 
increase  the  pleasures  of  life  without  adding  to  its 
burdens. 

The  means  which  thus  far  have  been  used  to  procure 
an  extension  of  the  field  of  employment  are  costly  and 
wasteful  in  their  operation,  and  by  causing  an  unequal 
distribution  of  wealth  usually  prevent  the  very  result 
they  are   supposed   to   accomplish.     When   the   state 


MAINTAINING  A    HIGH  STANDARD    OF  LIFE.  239 

makes  no  provision  for  the  extension  of  cultivation, 
it  must  be  brought  about  by  a  diminution  of  the  re- 
turn for  labor  and  capital  in  the  field  of  employment 
already  occupied  below  the  immediate  return  on  the 
new  land.  In  this  manner  labor  and  capital  are  in- 
duced to  leave  their  old  industries  and  displace  the 
obstacles  which  prevent  the  use  of  new  land.  Suppose 
that  of  every  twenty  acres  ten  are  already  in  use,  the 
price  of  the  produce  being  fifty  cents  per  bushel,  and 
that  fifty-five  cents  a  bushel  are  required  to  bring  the 
eleventh  acre  into  cultivation,  sixty  cents  for  the  twelfth 
acre,  and  a  like  increase  of  price  for  the  others.  With 
free  competition  the  price  of  produce  must  rise  to  fifty- 
five  cents  a  bushel  before  the  eleventh  acre  will  be 
tilled.  On  ten  of  the  eleven  acres  now  used  the  cost 
of  production  has  not  risen,  and  the  additional  five  cents 
a  bushel  on  all  their  produce  goes  to  the  owners  as  rent. 
The  people  pay  eleven  times  as  much  for  the  additional 
produce  as  they  would  have  paid  if  they  had  antici- 
pated the  increase  in  price  of  produce  and  prevented  it 
by  bringing  the  new  land  into  cultivation  at  public 
expense.  When  the  twelfth  acre  is  brought  into  use 
the  public  pay  twelve  times  what  is  necessary  for  this 
purpose,  and  a  proportionally  greater  amount  for  the 
other  acres.  They  also  pay  permanently  for  what  re- 
quires but  a  temporary  outlay,  since  the  extra  cost  is 
only  necessary  while  the  land  is  being  prepared  for 


240   THE  PREMISES   OF  POLITICAL   ECONOMV. 

tillage,  yet  under  free  competition  the  price  must  con- 
tinue to  rise,  so  that  produce  may  be  obtained  from 
other  lands  having  a  greater  cost  of  preparation. 

The  only  economic  method  for  any  society  to  pursue 
is  to  anticipate  the  rise  of  rent  and  use  the  public  reve- 
nue to  overcome  the  obstacles  to  the  extension  of  the 
field  of  employment.  Even  if  taxation  reduced  the 
earnings  of  labor,  it  would  be  better  to  have  a  small 
reduction  in  this  way  than  the  much  larger  reduction 
of  wages  which  the  rise  of  rent  would  otherwise  occa- 
sion. There  is,  however,  no  reason  to  believe  that  an 
increase  of  taxation  would  be  a  burden  upon  the  la- 
borers, since  it  would  reduce  rent,  if  there  is  no  land 
at  the  margin  of  cultivation. 

The  advocates  of  the  nationalization  of  land,  who 
demand  that  all  taxes  be  placed  on  rent,  base  their  doc- 
trine on  the  truth  of  the  Ricardian  theory  of  rent, 
which  asserts  that  there  is  always  some  land  at  the 
margin  of  cultivation  which  pays  no  rent,  and  will  be 
thrown  out  of  cultivation  if  the  price  of  agricultural 
produce  is  lowered.  When  all  land  pays  rent,  any  per- 
manent tax  will  reduce  rent,  since  it  will  change  the 
ratio  at  which  food  exchanges  for  other  commodities. 
If  ten  yards  of  cloth  exchange  for  a  bushel  of  wheat, 
and  a  tax  equal  to  the  value  of  one  yard  is  laid,  either 
on  cloth  or  food,  it  will  be  paid  from  rent  so  long  as 
the  exchange  of  nine  yards  of  cloth  for  a  bushel  of 


MAINTAINING    A    HIGH   STANDARD    OF  LIFE.  241 

wheat  does  not  reduce  the  quantity  of  wheat  produced. 
Rent  should  be  anticipated  and  prevented,  but  not 
confiscated.  There  never  has  been  guaranteed  any 
permanent  ratio  of  exchange  between  agricultural 
produce  and  other  commodities,  and  if  the  people  use 
legitimate  means  to  bring  about  a  ratio  of  exchange  more 
favorable  to  themselves,  the  landlords  have  no  right  to 
complain.  The  obstacles  to  the  extension  of  produc- 
tion, whether  in  men  or  land,  must  be  removed  even  if 
at  public  expense,  or  the  people  can  enjoy  but  few 
pleasures,  while  land  and  intelligence  will  be  mo- 
nopolies, and  absorb  the  larger  share  of  the  produce 
of  industry. 

The  removal  of  the  obstacles  in  land  is  greatly  sur- 
passed in  importance  by  the  public  utility  of  a  correct 
system  of  education  displacing  the  obstacles  to  the  in- 
crease of  intelligence.  Even  the  obstacles  to  culti- 
vating land  arise  mainly  from  ignorance  and  prejudice, 
and  are  removed  by  the  broader  view  of  life  which 
education  brings  to  its  possessors.  It  is  upon  educa- 
tion alone  that  we  can  rely  for  increasing  the  efficiency 
of  labor,  and  bringing  out  all  the  qualities  in  land  and 
man  which  are  necessary  to  adjust  man  to  the  conditions 
of  nature,  and  open  up  to  him  all  the  means  of  enjoy- 
ment which  nature  offers  to  those  who  conform  to  all 
her  demands. 

In  the  original  man  only  his  passions  and  appetites 

L        <7  21 


242  THE  PREMISES   OF  POLITICAL   ECONOMY. 

are  active,  while  all  the  other  sources  of  pleasure  are 
unavailable,  since  their  appreciation  depends  upon  qual- 
ities not  as  yet  called  into  exercise.  Each  different 
occupation  develops  some  quality  which  adds  to  its 
possessor's  sources  of  pleasure.  The  nations  which 
follow  the  chase  as  a  means  of  support  derive  their 
pleasures  from  this  source ;  nomadic  tribes  delight  in 
horsemanship  and  other  similar  sports  ;  warlike  nations 
enjoy  archery,  hunting,  and  fencing ;  the  agricultural 
classes  have  resources  of  happiness  closely  connected 
with  their  surroundings,  and  the  individuals  of  each 
class  in  every  other  occupation  take  their  pleasures 
from  sources  which  their  active  qualities  allow  them  to 
enjoy. 

The  man  whose  vocation  calls  into  activity  but  one 
quality  has  but  few  sources  of  pleasure,  and  in  him  the 
tendency  to  overpopnlate,  to  eat,  and  to  drink  is  so 
strong  as  to  injure  himself  and  society.  It  is  to  such 
men,  and  not  to  those  with  fully-developed  faculties, 
that  Malthus  refers  to  prove  the  universality  of  his 
law,  and  there  is  a  seeming  justification  for  this  posi- 
tion when  we  see  how  universally  the  combinations  of 
weak  men,  with  but  one  active  quality,  displace  the 
strong  men,  who  have  developed  all  the  qualities  given 
them  by  nature.  Wherever  an  extended  division  of 
labor  is  carried  through  there  is  a  combination  of  men, 
each  having  only  one  quality  developed,  and  relying 


MAINTAINING   A    HIGH  STANDARD    OF  LIFE.  243 

on  those  having  some  other  active  quality  to  make  up 
his  deficiencies.  They  all  desire  only  physical  pleas- 
ures, and  the  field  of  employment  is  limited  by  the 
unequal  distribution  of  wealth  which  they  are  sure  to 
bring  upon  themselves.  The  greater  the  number  of 
qualities  which  are  developed  in  any  man  the  more 
sources  of  pleasure  will  he  have,  and  the  greater  will 
be  the  inducement  to  labor  and  to  control  his  physical 
pleasures,  so  that  he  may  have  the  means  of  enjoying 
all  that  his  developed  faculties  allow  him  to  appreciate. 
Man's  power  to  enjoy  is  commensurate  with  his 
power  to  produce,  and  there  are  no  means  of  enlarging 
our  sources  of  pleasure  but  by  increasing  our  industrial 
efficiency.  It  is  not  the  man  who  can  do  one  thing 
well,  but  he  who  is  efficient  in  many  directions,  that 
has  the  most  resources  for  obtaining  happiness.  The 
injuries  accompanying  the  division  of  labor  arise  from 
each  man's  devoting  himself  so  exclusively  to  one  occu- 
pation that  he  loses  both  the  power  to  make  and  to 
enjoy  what  others  produce.  When  each  person  can 
perform  all  the  acts  necessary  in  an  isolated  state,  it 
increases  the  efficiency  of  all  if  one  becomes  a  tailor, 
the  second  a  spinner,  the  third  a  shoemaker,  and  so  on, 
the  others  taking  those  vocations  in  which  they  are 
most  efficient.  Each  one,  however,  following  his  trade 
exclusively,  loses  his  power  to  make  anything  else,  and 
also  his  ability  to  enjoy  what  he  formerly  produced. 


244  THE  PREMISES   OF  POLITICAL   ECONOMY. 

and  thus  the  whole  society  sinks  to  a  lower  social  state, 
where  physical  pleasures  are  the  sole  means  of  enjoy- 
ment. The  increase  of  drunkenness  and  other  physical 
vices  which  have  accompanied  modern  progress  are  the 
result  of  the  extended  division  of  labor,  which  destroys 
the  ability  both  to  produce  and  to  enjoy  most  of  those 
things  that  are  sources  of  pleasure  to  man  in  an  isolated 
state.  We  can  obtain  the  advantage  derived  from  the 
division  of  labor  without  losing  the  ability  to  enjoy  all 
kinds  of  produce  only  by  so  educating  all  the  faculties 
of  man  that  he  will  have  that  independence  and  all 
those  sources  of  pleasure  which  isolated  men  enjoy. 
Moreover,  those  qualities  which  increase  the  sources  of 
pleasure  are  the  very  ones  by  which  the  field  of  em- 
ployment is  enlarged  and  the  tendency  to  overpopulate 
is  reduced,  and  only  when  education  has  developed  all 
the  qualities  in  every  man  can  we  expect  this  tendency 
to  become  so  harmless  that  all  men  can  enjoy  the  pleas- 
ures of  an  isolated  state  along  with  the  efficiency  of 
modern  civilization. 


THE   END. 


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UNIVERSITY  OF  CALIFORNIA  AT  LOS  ANGELES 

THE  UNIVERSITY  LIBRARY 

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